Exhibit
10.2


 




 





AMENDED AND
RESTATED


 


LOAN AND
SECURITY AGREEMENT


 


by and
among


 


LASALLE
BUSINESS CREDIT, LLC, as Agent


 


THE
FINANCIAL INSTITUTIONS FROM TIME TO TIME


A PARTY
HERETO, as Lenders


 


PNC BANK,
NATIONAL ASSOCIATION, as Documentation Agent


 


THE CIT
GROUP/BUSINESS CREDIT, INC., as Syndication Agent


 


and


 


PERRY
JUDD’S INCORPORATED, as Borrower


 


DATED AS OF
AUGUST 10, 2004




 





 

















 


TABLE OF
CONTENTS


 


	
  1.

  	
  DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS.

  	
   

  
	
  (a)

  	
  Revolving Loans.

  	
   

  
	
  (b)

  	
  Term
  Loan.

  	
   

  
	
  (c)

  	
  Repayments.

  	
   

  
	
  (d)

  	
  Notes.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  LETTERS OF
  CREDIT.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  General
  Terms.

  	
   

  
	
  (b)

  	
  Requests for Letters of
  Credit.

  	
   

  
	
  (c)

  	
  Obligations Absolute.

  	
   

  
	
  (d)

  	
  Expiration Dates
  of Letters of Credit.

  	
   

  
	
  (e)

  	
  Participation.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  INTEREST, FEES AND CHARGES.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Interest Rate.

  	
   

  
	
  (b)

  	
  Other LIBOR Provisions.

  	
   

  
	
  (c)

  	
  Fees And Charges.

  	
   

  
	
  (d)

  	
  Maximum Interest.

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  COLLATERAL.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Grant of Security
  Interest to Agent.

  	
   

  
	
  (b)

  	
  Other Security.

  	
   

  
	
  (c)

  	
  Possessory Collateral.

  	
   

  
	
  (d)

  	
  Electronic Chattel Paper.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PRESERVATION OF
  COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  POSSESSION OF
  COLLATERAL AND RELATED MATTERS.

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  COLLECTIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  COLLATERAL, AVAILABILITY AND
  FINANCIAL REPORTS AND SCHEDULES.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Monthly Reports.

  	
   

  
	
  (b)

  	
  Financial Statements.

  	
   

  
	
  (c)

  	
  Annual Projections.

  	
   

  



 


i

















 


	
  (d)

  	
  Public Reporting.

  	
   

  
	
  (e)

  	
  Other Information.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  TERMINATION; AUTOMATIC
  RENEWAL.

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  REPRESENTATIONS AND
  WARRANTIES.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Financial
  Statements and Other Information.

  	
   

  
	
  (b)

  	
  Locations.

  	
   

  
	
  (c)

  	
  Loans by Borrower.

  	
   

  
	
  (d)

  	
  Accounts and Inventory.

  	
   

  
	
  (e)

  	
  Liens.

  	
   

  
	
  (f)

  	
  Organization,
  Authority and No Conflict.

  	
   

  
	
  (g)

  	
  Litigation.

  	
   

  
	
  (h)

  	
  Compliance
  with Laws and Maintenance of Permits.

  	
   

  
	
  (i)

  	
  Affiliate Transactions.

  	
   

  
	
  (j)

  	
  Names and Trade Names.

  	
   

  
	
  (k)

  	
  Equipment.

  	
   

  
	
  (1)

  	
  Enforceability.

  	
   

  
	
  (m)

  	
  Solvency.

  	
   

  
	
  (n)

  	
  Indebtedness.

  	
   

  
	
  (o)

  	
  Margin Security and
  Use of Proceeds.

  	
   

  
	
  (p)

  	
  Parent,
  Subsidiaries and Affiliates.

  	
   

  
	
  (q)

  	
  No Defaults.

  	
   

  
	
  (r)

  	
  Employee Matters.

  	
   

  
	
  (s)

  	
  Intellectual Property.

  	
   

  
	
  (t)

  	
  Environmental Matters.

  	
   

  
	
  (u)

  	
  ERISA Matters.

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATIVE COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Maintenance of Records.

  	
   

  
	
  (b)

  	
  Notices.

  	
   

  
	
  (c)

  	
  Compliance with Laws and Maintenance of
  Permits.

  	
   

  
	
  (d)

  	
  Inspection and Audits.

  	
   

  
	
  (e)

  	
  Insurance.

  	
   

  
	
  (f)

  	
  Collateral.

  	
   

  
	
  (g)

  	
  Use of Proceeds.

  	
   

  
	
  (h)

  	
  Taxes.

  	
   

  
	
  (i)

  	
  Intellectual Property.

  	
   

  
	
  (j)

  	
  Checking
  Accounts and Cash Management Services.

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  NEGATIVE COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Guaranties.

  	
   

  
	
  (b)

  	
  Indebtedness.

  	
   

  
	
  (c)

  	
  Liens.

  	
   

  



 


ii

















 


	
  (d)

  	
  Mergers, Sales, Acquisitions,
  Subsidiaries and Other Transactions Outside the Ordinary Course of Business.

  	
   

  
	
  (e)

  	
  Dividends and
  Distributions.

  	
   

  
	
  (f)

  	
  Investments; Loans.

  	
   

  
	
  (g)

  	
  Fundamental
  Changes, Line of Business.

  	
   

  
	
  (h)

  	
  Equipment.

  	
   

  
	
  (i)

  	
  Affiliate Transactions.

  	
   

  
	
  (j)

  	
  Settling of Accounts.

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  FINANCIAL
  COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Fixed Charge Coverage.

  	
   

  
	
  (b)

  	
  Leverage Ratio Coverage.

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  DEFAULT.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Payment.

  	
   

  
	
  (b)

  	
  Breach
  of this Agreement and the Other Agreements.

  	
   

  
	
  (c)

  	
  Breaches of Other
  Obligations.

  	
   

  
	
  (d)

  	
  Breach of
  Representations and Warranties.

  	
   

  
	
  (e)

  	
  Loss of Collateral.

  	
   

  
	
  (f)

  	
  Levy, Seizure or
  Attachment.

  	
   

  
	
  (g)

  	
  Bankruptcy or Similar
  Proceedings.

  	
   

  
	
  (h)

  	
  Appointment of Receiver.

  	
   

  
	
  (i)

  	
  Judgment.

  	
   

  
	
  (j)

  	
  Dissolution of Obligor.

  	
   

  
	
  (k)

  	
  Default or Revocation
  of Guaranty.

  	
   

  
	
  (l)

  	
  Criminal Proceedings.

  	
   

  
	
  (m)

  	
  Change of Control.

  	
   

  
	
  (n)

  	
  Material Adverse Change.

  	
   

  
	
  (o)

  	
  Indenture Event of Default.

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  REMEDIES UPON AN
  EVENT OF DEFAULT.

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  CONDITIONS
  PRECEDENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  SETTLEMENTS,
  DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  AGENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Appointment of Agent.

  	
   

  
	
  (b)

  	
  Nature of Duties of Agent.

  	
   

  
	
  (c)

  	
  Lack of Reliance on Agent.

  	
   

  
	
  (d)

  	
  Certain Rights of Agent.

  	
   

  
	
  (e)

  	
  Reliance by Agent.

  	
   

  
	
  (f)

  	
  Indemnification of Agent.

  	
   

  



 


iii

















 


	
  (g)

  	
  Agent in its
  Individual Capacity.

  	
   

  
	
  (h)

  	
  Holders of Notes.

  	
   

  
	
  (i)

  	
  Successor Agent.

  	
   

  
	
  (j)

  	
  Collateral Matters.

  	
   

  
	
  (k)

  	
  Actions with Respect
  to Defaults.

  	
   

  
	
  (l)

  	
  Delivery of Information.

  	
   

  
	
  (m)

  	
  Demand.

  	
   

  
	
  (n)

  	
  Notice of Default.

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  ASSIGNABILITY.

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  AMENDMENTS,
  ETC.

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  NONLIABILITY OF
  AGENT AND LENDERS.

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  INDEMNIFICATION.

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  NOTICE.

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  CHOICE OF GOVERNING LAW;
  CONSTRUCTION; FORUM SELECTION.

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  HEADINGS OF SUBDIVISIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  POWER OF ATTORNEY.

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  CONFIDENTIALITY.

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  COUNTERPARTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  ELECTRONIC SUBMISSIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  EFFECT OF AMENDMENT
  AND RESTATEMENT.

  	
   

  
	
   

  	
   

  	
   

  
	
  32.

  	
  OTHER
  WAIVERS.

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  DESIGNATED SENIOR
  INDEBTEDNESS.

  	
   

  



 


iv

















 


	
  EXHIBIT A
  — BUSINESS AND COLLATERAL LOCATIONS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT B —
  COMPLIANCE CERTIFICATE

  	
   

  
	
   

  	
   

  
	
  EXHIBIT C — COMMERCIAL
  TORT CLAIMS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT
  D — FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 1 —
  PERMITTED LIENS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 5
  (a) – EXCLUDED EQUIPMENT

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11 (g) —
  LITIGATION

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11
  (i) — AFFILIATE TRANSACTIONS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11
  (j) — NAMES & TRADE NAMES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11 (n)
  — INDEBTEDNESS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11
  (p) — PARENT, SUBSIDIARIES AND AFFILIATES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 12
  (j)–CHARGES REGARDING CHECKING ACCOUNTS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 13
  (f) – LOANS BY BORROWER

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 17
  (a) – CLOSING DOCUMENT CHECKLIST

  	
   

  



 


v

















 


AMENDED AND
RESTATED

LOAN AND SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as amended,
modified or supplemented from time to time, this “Agreement”) made this 10th day of August, 2004 by and among LASALLE
BUSINESS CREDIT, LLC, a Delaware limited liability company (in its individual
capacity, “LaSalle”), as agent (in
such capacity as agent, “Agent”)
for itself and all other lenders from time to time a party hereto (“Lenders”), 135 South LaSalle Street,
Chicago, Illinois 60603-4105, PNC BANK, NATIONAL ASSOCIATION (in its individual
capacity, “PNC Bank”) as
documentation agent (“Documentation Agent”) and
as a Lender, One South Wacker, Suite 2980, Chicago, Illinois 60606, THE CIT
GROUP/BUSINESS CREDIT, INC. (in its individual capacity, “CIT”) as syndication agent (“Syndication Agent”) and as a Lender, Ten
South LaSalle Street, Chicago, Illinois 60603, all other Lenders and Perry
Judd’s Incorporated, a Delaware corporation, having its principal place of
business at 575 West Madison Street, Waterloo, Wisconsin 53594 (“Borrower”).


 


WITNESSETH:


 


WHEREAS, Borrower and LaSalle are parties to a
certain Loan and Security Agreement, dated August 19, 2002 as it may be
amended (the “Original Agreement”) and
various other agreements;


 


WHEREAS, Borrower has requested that LaSalle amend
the terms and conditions of the Original Agreement in several respects,
including, without limitation, the addition of other lenders with LaSalle
acting as agent and Agent and Lenders are willing to do so subject to the terms
and conditions set forth in this Agreement;


 


WHEREAS, it is the intention of the parties to this
Agreement that upon execution of this Agreement, the Original Agreement (and,
except as otherwise set forth in the following proviso, all obligations and
rights of any party thereunder), shall be amended and restated by this
Agreement; provided, however, the obligations to repay the loans and advances
arising under the Original Agreement shall continue in full force and effect
and the liens and security interests securing payment thereof shall be
continuing but shall now be governed by the terms of this Agreement and the
Other Agreements;


 


WHEREAS, Borrower may, from time to time, continue
to request Loans from Agent and Lenders, and the parties wish to provide for
the terms and conditions upon which such Loans or other financial
accommodations, if made by Agent and Lenders, shall be made;


 


NOW, THEREFORE, in consideration of any Loan
(including any Loan by renewal or extension) hereafter made to Borrower by
Agent and/or Lenders, and for other


 


6

















 


good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Borrower, the parties agree as follows:


 


1.  DEFINITIONS.


 


“Account”, “Account Debtor”,
“Chattel Paper”, “Commercial Tort Claims”, “Deposit Accounts”, “Documents”,
“Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”,
“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit
Right”, “Proceeds” and “Tangible Chattel Paper” shall have the respective meanings assigned
to such terms in the Illinois Uniform Commercial Code, as the same may be in
effect from time to time.


 


“Affiliate” shall mean any Person (i) which directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, Borrower, (ii) which beneficially owns or holds five
percent (5%) or more of the voting control or equity interests of Borrower, or
(iii) five percent (5%) or more of the voting control or equity interests of
which is beneficially owned or held by Borrower.


 


“Applicable Margin” shall mean the margin set forth below with
respect to Prime Rate Revolving Loans, Prime Rate Term Loans, LIBOR Rate
Revolving Loans, LIBOR Rate Term Loans and Unused Line Fee as in effect from
time to time as applicable; provided that until April 30, 2005, the
Applicable Margin shall be set at Level II and provided further that,
thereafter the Applicable Margin shall be adjusted five (5) Business Days after
receipt of Borrower’s quarterly financial statements for each year commencing
with the fiscal quarter ending March 31, 2005 based on Borrower’s Leverage
Ratio for the twelve month period ending on such date as shown on such
financial statements, as set forth on the following chart:


 


	
  Level

  	
   

  	
  Leverage

  Ratio

  	
   

  	
  Applicable

  Margin

  LIBOR

  Rate

  Revolving

  Loans

  	
   

  	
  Applicable

  Margin

  Prime Rate

  Revolving

  Loans

  	
   

  	
  Applicable

  Margin

  Unused

  Line Fee

  	
   

  	
  Applicable

  Margin

  LIBOR

  Rate Term

  Loans

  	
   

  	
  Applicable

  Margin

  Prime Rate

  Term

  Loans

  
	
  I

  	
   

  	
  > 2.75x

  	
   

  	
  250 bps

  	
   

  	
  25 bps

  	
   

  	
  50.0 bps

  	
   

  	
  275 bps

  	
   

  	
  50 bps

  
	
  II

  	
   

  	
  > 2.25x
  and

  < 2.75x

  	
   

  	
  225 bps

  	
   

  	
  0 bps

  	
   

  	
  37.5 bps

  	
   

  	
  250 bps

  	
   

  	
  25 bps

  
	
  III

  	
   

  	
  > 1 .75x
  and

  < 2.25x

  	
   

  	
  200 bps

  	
   

  	
  0 bps

  	
   

  	
  37.5 bps

  	
   

  	
  225 bps

  	
   

  	
  0 bps

  
	
  IV

  	
   

  	
  < 1.75x

  	
   

  	
  175 bps

  	
   

  	
  0 bps

  	
   

  	
  37.5 bps

  	
   

  	
  200 bps

  	
   

  	
  0 bps

  



 


“Assignment and Acceptance” shall have the meaning in Section 20
hereof.


 


“Business Day” shall mean any day other than a Saturday, a
Sunday or (i) with respect to all matters, determinations, fundings and
payments in connection with LIBOR Rate


 


7

















 


Loans, any day on which
banks in London, England or Chicago, Illinois are required or permitted to
close, and (ii) with respect to all other matters, any day that banks in
Chicago, Illinois are required or permitted to close.


 


“Capital Expenditures” shall mean with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Holdings and
its Subsidiaries during such period that are required by generally accepted
accounting principles, consistently applied, to be included in or reflected by
the property, plant and equipment or similar fixed asset accounts (or
intangible accounts subject to amortization) on the balance sheet of Holdings
and its Subsidiaries.


 


“Collateral” shall
mean all of the property of Borrower described in Section 5 hereof,
together with all other real or personal property of any Obligor or any other
Person, including, without limitation, Holdings, now or hereafter pledged to
Agent, for the benefit of Agent and Lenders, to secure, either directly or
indirectly, repayment of any of the Liabilities.


 


“Defaulting Lender” shall have the meaning set forth in subsection 2(a)
hereof.


 


“EBITDA” shall mean, with respect to any period,
Holdings and its Subsidiaries net income after taxes for such period (excluding
any after-tax gains or losses on the sale of assets (other than the sale of
Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses) plus interest expense, income tax
expense, depreciation and amortization for such period, plus or minus
any other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period plus restructuring charges
incurred prior to June 30, 2004 in connection with the closing of the 161
North Jackson Street, Waterloo, Wisconsin location.


 


“Eligible Account” shall mean an Account owing to Borrower which
is acceptable to Agent in its Permitted Discretion for lending purposes
(provided that Agent shall give Borrower prior written notice of any
eligibility criteria established by Agent and not set forth herein). Without
limiting Agent’s discretion, Agent shall, in general, consider an Account to be
an Eligible Account if it meets, and so long as it continues to meet, the
following requirements:


 


(i)                                     it is genuine and in all respects what it
purports to be;


 


(ii)                                  it is owned by Borrower, Borrower has the
right to subject it to a security interest in favor of Agent or assign it to
Agent and it is subject to a first priority perfected security interest in
favor of Agent and to no other claim, lien, security interest or encumbrance
whatsoever, other than Permitted Liens;


 


(iii)                               it arises from (A) the performance of
services by Borrower in the ordinary course of Borrower’s business, and such
services have been fully performed and acknowledged and accepted by the Account
Debtor thereunder; or (B) the sale or lease of Goods by Borrower in the
ordinary course of Borrower’s


 


8

















 


business, and (x) such Goods have been completed in accordance with the
Account Debtor’s specifications (if any) and delivered to the Account Debtor,
(y) such Account Debtor has not refused to accept, returned or offered to
return, any of the Goods which are the subject of such Account, and (z)
Borrower has possession of, or Borrower has delivered to Agent (at Agent’s
request) shipping and delivery receipts evidencing delivery of such Goods;


 


(iv)                              it is evidenced by an invoice rendered to the
Account Debtor thereunder, is due and payable within ninety (90) days after the
date of the invoice and does not remain unpaid ninety (90) days past the
invoice date thereof; provided, however, that if more than twenty-five percent
(25%) of the aggregate dollar amount of invoices owing by a particular Account
Debtor remain unpaid ninety (90) days after the respective invoice dates
thereof, then all Accounts owing by that Account Debtor shall be deemed ineligible;


 


(v)                                 it is a valid, legally enforceable and
unconditional obligation of the Account Debtor thereunder, and is not subject
to setoff, counterclaim, credit, allowance or adjustment by such Account
Debtor, or to any claim by such Account Debtor denying liability thereunder in
whole or in part;


 


(vi)                              it does not arise out of a contract or order
which fails in any material respect to comply with the requirements of
applicable law;


 


(vii)                           the Account Debtor thereunder is not a
director, officer, employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate;


 


(viii)                        it is not an Account with respect to which
the Account Debtor is the United States of America or any state or local
government, or any department, agency or instrumentality thereof, unless
Borrower assigns its right to payment of such Account to Agent pursuant to, and
in full compliance with, the Assignment of Claims Act of 1940, as amended, or
any comparable state or local law, as applicable;


 


(ix)                                it is not an Account with respect to which
the Account Debtor is located in a state which requires Borrower, as a
precondition to commencing or maintaining an action in the courts of that
state, either to (A) receive a certificate of authority to do business and be
in good standing in such state; or (B) file a notice of business activities
report or similar report with such state’s taxing authority, unless (x)
Borrower has taken one of the actions described in clauses (A) or (B); (y) the
failure to take one of the actions described in either clause (A) or (B) may be
cured retroactively by Borrower at its election; or (z) Borrower has proven, to
Agent’s satisfaction, that it is exempt from any such requirements under any
such state’s laws;


 


(x)                                   the Account Debtor is located within the
United States of America, Canada or is located within a foreign country other
than Canada and, in such case, the Account is payable in U.S. Dollars and with
respect to Account Debtors who are residents or citizens of and are located
within a foreign country other


 


9

















 


than Canada, the Account is supported by a letter of credit which is in
form and substance satisfactory to Agent, issued by a financial institution
acceptable to Lender and assigned to Agent in a manner acceptable to Agent;


 


(xi)                                other than Accounts owing from the Boy Scouts
of America, it is not an Account with respect to which the Account Debtor’s
obligation to pay is subject to any repurchase obligation or return right
(other than return rights for defective Goods or repairs available in the
ordinary course of business), as with sales made on a bill-and-hold, guaranteed
sale, sale on approval, sale or return or consignment basis;


 


(xii)                             it is not an Account (A) with respect to
which any representation or warranty contained in this Agreement is untrue; or
(B) which violates any of the covenants of Borrower contained in this
Agreement;


 


(xiii)                          except with respect to The McGraw Hill
Companies, Inc., it is not an Account which, when added to a particular Account
Debtor’s other indebtedness to Borrower, exceeds 10% of all Accounts of
Borrower (except that Accounts excluded from Eligible Accounts solely by reason
of this clause (xiii) shall be Eligible Accounts to the extent of such credit
limit); and


 


(xiv)                         it is not an Account with respect to which
the prospect of payment by the Account Debtor is or will be impaired, as
determined by Agent in its Permitted Discretion.


 


“Eligible Inventory” shall mean Inventory of Borrower consisting
solely of raw materials and work in process which is acceptable to Agent in its Permitted Discretion for lending purposes (provided that
Agent shall give Borrower written notice of any eligibility criteria
established by Agent and not set forth herein). Without limiting Agent’s
discretion, Agent shall, in general, consider Inventory to be Eligible
Inventory if it meets, and so long as it continues to meet, the following
requirements:


 


(i)                                     it is owned by Borrower, Borrower has the
right to subject it to a security interest in favor of Agent and it is subject
to a first priority perfected security interest in favor of Agent and to no
other claim, lien, security interest or encumbrance whatsoever, other than
Permitted Liens;


 


(ii)                                  it is located on one of the premises listed
on Exhibit A (or other locations of which Agent has been advised in
writing pursuant to subsection 12(b)(i) hereof), and is not in
transit;


 


(iii)                               if held for sale or lease or furnishing under
contracts of service, it is (except as Agent may otherwise consent in writing) new
and unused and free from defects which would, in Agent’s sole determination,
affect its market value;


 


(iv)                              it is not stored with a bailee, consignee,
warehouseman, processor or similar party unless Agent has given its prior
written approval and


 


10

















 


Borrower has caused any such bailee, consignee, warehouseman, processor
or similar party to issue and deliver to Agent, in form and substance
acceptable to Agent, such Uniform Commercial Code financing statements,
warehouse receipts, waivers and other documents as Agent shall require;


 


(v)                                 Agent has determined in its Permitted
Discretion, in accordance with Agent’s customary business practices, that it is
not unacceptable due to age, type, category or quantity; and


 


(vi)                              it is not Inventory (A) with respect to which
any of the representations and warranties contained in this Agreement are
untrue; or (B) which violates any of the covenants of Borrower contained in
this Agreement.


 


“Environmental Laws” shall mean all federal, state, district,
local and foreign laws, rules, regulations, ordinances, and consent decrees
relating to health, safety, hazardous substances, pollution and
environmental matters, as now or at any time hereafter in effect, applicable to
Borrower’s business or facilities owned or operated by Borrower, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials.


 


“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended, modified or restated from time to time.


 


“Event of Default” shall have the meaning specified in Section 15
hereof.


 


“Excess Availability” shall mean, as of any date of determination
by Agent, the lesser of (i) the Maximum Revolving Loan Limit less the sum of
the outstanding Revolving Loans and Letter of Credit Obligations and (ii) the
Revolving Loan Limit less the sum of the outstanding Revolving Loans and Letter
of Credit Obligations, in each case as of the close of business on such date.


 


“Fiscal Year” shall mean each twelve (12) month accounting
period of Borrower, which ends on December 31st of each year.


 


“Fixed Charges” shall mean, with respect to Holdings and its
Subsidiaries on a consolidated basis for any period, the sum, without
duplication, of scheduled payments of principal during the applicable period
with respect to all indebtedness of Holdings and its Subsidiaries for borrowed
money, plus scheduled payments of principal during the applicable period with
respect to all capitalized lease obligations of Holdings and its Subsidiaries,
plus scheduled payments of interest during the applicable period with respect
to all indebtedness of Holdings and its Subsidiaries for borrowed money
including capital lease obligations, plus


 


11

















 


unfinanced
Capital Expenditures of Holdings and its Subsidiaries during the applicable
period.


 


“Hazardous Materials” shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including, without limitation any that are or become classified as hazardous
or toxic under any Environmental Law).


 


“Holdings” shall mean Perry Judd’s Holdings, Inc., a
Delaware corporation.


 


“Indemnified Party” shall have the meaning specified in Section 18
hereof.


 


“Indenture” shall mean the Indenture dated December 16,
1997 among Perry Judd’s Holdings, Inc., a Delaware Corporation, each of the
Subsidiary Guarantors named therein and U.S. Trust Company of California, N.A.
, as Trustee, as in effect as of the date hereof.


 


“Interest Period” shall have the meaning specified in subsection 4(a)(ii)
hereof.


 


“LaSalle Bank” shall mean LaSalle Bank National Association,
Chicago, Illinois.


 


“Letter of Credit” shall mean any Letter of Credit issued on
behalf of Borrower in accordance with this Agreement.


 


“Letter of Credit Obligations” shall mean, as of any date of determination,
the sum of (i) the aggregate undrawn face amount of all Letters of Credit, and
(ii) the aggregate unreimbursed amount of all drawn Letters of Credit not
already converted to Loans hereunder.


 


“Leverage Ratio” shall mean the ratio of Holdings and its
Subsidiaries’ indebtedness for borrowed money (including, without limitation,
Letters of Credit) to EBITDA, provided that, indebtedness for borrowed money
shall not include the issuance of preferred stock.


 


“Liabilities” shall mean any and all obligations,
liabilities and indebtedness of Borrower to Agent, each Lender and to LaSalle
Bank and its affiliates of any and every kind and nature, howsoever created,
arising or evidenced and howsoever owned, held or acquired, whether now or
hereafter existing, whether now due or to become due, whether primary,
secondary, direct, indirect, absolute, contingent or otherwise (including,
without limitation,


 


12

















 


obligations
of performance), whether several, joint or joint and several, and whether
arising or existing under this Agreement and the Other Agreements.


 


“LIBOR Rate” shall mean, with respect to any LIBOR Rate
Loan for any Interest Period, a rate per annum equal to (a) the offered rate
for deposits in United States dollars for a period equal to such Interest
Period as displayed in the Bloomberg
Financial Markets system (or such other authoritative source as
selected by Agent in its sole discretion) as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period divided by (b) a
number equal to 1.0 minus the maximum reserve percentages (expressed as a
decimal fraction) including, without limitation, basic supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect, for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
such Board) which are required to be maintained by Agent by the Board of
Governors of the Federal Reserve System. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in such reserve
percentage.


 


“LIBOR Rate Loans” shall mean the Loans bearing interest with
reference to the LIBOR Rate.


 


“LIBOR Rate Revolving Loans” shall mean LIBOR Rate Loans that are
Revolving Loans.


 


“LIBOR Rate Term Loans” shall mean LIBOR Rate Loans that are Term
Loans.


 


“Loans” shall mean all loans and advances made by
Agent and/or Lenders to or on behalf of Borrower hereunder.


 


“Lock Box” and ‘Lock
Box Account” shall have the meanings specified in subsection 8(a)
hereof.


 


“Material Adverse Effect” shall mean a material adverse effect on the
business, assets, liabilities, operations or condition, financial or otherwise,
of a Person.


 


“Maximum Loan Limit” shall mean Sixty-Six Million and No/100
Dollars ($66,000,000.00).


 


“Maximum Revolving Loan Limit” shall have the meaning specified in subsection 2(a)
hereof.


 


“Obligor” shall mean Borrower and each other Person who
is or shall become primarily or secondarily liable for any of the Liabilities.


 


“Original Term” shall have the meaning specified in Section 10 hereof.


 


13

















 


“Other Agreements” shall mean all agreements, instruments and
documents, other than this Agreement, including, without limitation,
guaranties, mortgages, trust deeds, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, leases, financing
statements and all other writings heretofore, now or from time to time
hereafter executed by or on behalf of Borrower or any other Person and
delivered to Agent and/or any Lender in connection with the transactions
contemplated hereby or to LaSalle Bank and its affiliates in connection with
any accounts, agreements or services between Borrower and LaSalle Bank and its
affiliates, as each of the same may be amended, modified or supplemented from
time to time.


 


“Parent” shall mean any Person now or at any time or
times hereafter owning or controlling (alone or with any other Person) at least
a majority of the issued and outstanding equity of Borrower and, if Borrower is
a partnership, the general partner of Borrower.


 


“PBGC” shall have the meaning specified in subsection 12(b)(v)
hereof.


 


“Permitted Discretion” shall mean a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.


 


“Permitted Liens” shall mean (i) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or suppliers
incurred in the ordinary course of business and securing amounts not yet due or
declared to be due by the claimant thereunder or amounts which are being
contested in good faith and by appropriate proceedings and for which Borrower
has maintained adequate reserves; (ii) liens or security interests in favor of
Agent; (iii) zoning restrictions and easements, licenses, covenants and other
restrictions affecting the use of real property that do not individually or in
the aggregate have a material adverse effect on Borrower’s ability to use such
real property for its intended purpose in connection with Borrower’s business;
(iv) liens in connection with purchase money indebtedness, operating leases and
capitalized leases otherwise permitted pursuant to this Agreement, provided,
that such liens attach only to the assets the purchase of which was financed by
such purchase money indebtedness or which is the subject of such capitalized or
operating leases; (v) liens set forth on Schedule 1 hereto; (vi)
liens specifically permitted by Agent in writing and securing amounts less than
$250,000.00; (vii) involuntary liens securing amounts less than $500,000.00 or
involuntary liens which are released or for which a bond acceptable to Agent in
its Permitted Discretion has been posted within ten (10) days of its creation,
or which are covered by insurance to the reasonable satisfaction of Agent;
(viii) pledges or deposits in connection with worker’s compensation,
unemployment insurance and other social security legislation, or to secure the
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases or to secure statutory obligations or surety, appeal
or stay bonds, or to secure indemnity, performance or other similar bonds in
the ordinary course of business; (ix) liens for taxes not yet due or for taxes
which are being contested in good faith and by appropriate proceedings and for
which reserves are being maintained on Borrower’s financial statements in such
amount as is required under generally accepted accounting principles and a
reserve is maintained by Agent against the amount


 


14

















 


which
Borrower is permitted to borrow hereunder in an amount of money which, in the
sole judgment of Agent is sufficient to pay such taxes and any interest or
penalties that may accrue thereon, and if Borrower fails to prosecute such
contest, Agent may advance and pay such taxes, interest and penalties and any
amounts so advanced shall constitute Loans hereunder; (x) liens on assets of
Borrower which are not part of the Collateral provided that the granting of
such liens shall not constitute a Default under and as defined in the
Indenture; (xi) bankers’ liens or rights of recoupment or offset arising in
connection with investments permitted under subsection 13(f); and (xii)
extensions and renewals of any of the foregoing so long as the aggregate amount
of extended and renewed liens are not increased and are on terms and conditions
no more restricted than the terms and conditions of the liens extended and
renewed.


 


“Person” shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, entity, party
or foreign or United States government (whether federal, state, county, city,
municipal or otherwise), including, without limitation, any instrumentality,
division, agency, body or department thereof.


 


“Plan” shall have the meaning specified in subsection 12(b)(v)
hereof.


 


“Pre-Settlement Determination Date”
shall have the
meaning specified in Section 18 hereof.


 


“Prime Rate” shall mean LaSalle Bank’s publicly announced
prime rate (which is not intended to be LaSalle Bank’s lowest or most favorable
rate in effect at any time) in effect from time to time.


 


“Prime Rate Loans” shall mean the Loans bearing interest with
reference to the Prime Rate.


 


“Prime Rate Revolving Loans” shall mean Prime Rate Loans that are
Revolving Loans.


 


“Prime Rate Term Loans” shall mean Prime Rate Loans that are Term
Loans.


 


“Pro Rata Share” shall mean at any time, with respect to any
Lender, a fraction (expressed as a percentage in no more than nine (9) decimal
places), the numerator of which shall be the sum of the Revolving Loan
Commitment, Term Loan Commitment, of such Lender at such time and the
denominator of which shall be the Maximum Loan Limit at such time.


 


“Renewal Term” shall have the meaning specified in Section 10
hereof.


 


“Requisite Lenders” shall mean, at any time, Lenders having Pro
Rata Shares aggregating at least sixty-six and two-thirds percent (66-2/3rds%)
at such time.


 


15

















 


“Revolving Loan Commitment” shall mean, with respect to any Lender, the
maximum amount of Revolving Loans which such Lender has agreed to make to
Borrower, subject to the terms and conditions of this Agreement, as set forth
on the signature page hereto or an Assignment and Acceptance Agreement executed
by such Lender.


 


“Revolving Loan Limit” shall have the meaning specified in subsection 2(a)
hereof.


 


“Revolving Loans” shall have the meaning specified in subsection 2(a)
hereof.


 


“Settlement Date” shall have the meaning specified in Section 18
hereof.


 


“Subsidiary” shall mean any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by Borrower, or
any partnership, joint venture or limited liability company of which more than
fifty percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by Borrower or any partnership of which Borrower
is a general partner.


 


“Tax” shall mean, in relation to any LIBOR
Rate Loans and the applicable LIBOR Rate, any tax, levy, impost,
duty, deduction, withholding or charges of whatever nature required to be
paid by Agent or any Lender and/or to be withheld or deducted from any payment
otherwise required hereby to be made by Borrower to Agent or any Lender;
provided, that the term “Tax” shall not include any taxes imposed upon the net
income of Agent or any Lender.


 


“Term Loan” shall have the meaning specified in subsection 2(b)
hereof.


 


“Term Loan Commitment” shall mean, with respect to any Lender, the
maximum amount of the Term Loan which such Lender has agreed to make, subject
to the terms and conditions of this Agreement, as set forth on the signature
page hereto or on any Assignment and Acceptance Agreement executed by such
Lender.


 


2.  LOANS.


 


(a)                                  Revolving Loans.


 


Subject to the terms and conditions of this Agreement and the Other Agreements, during the Original Term
and any Renewal Term, each Lender, severally and not jointly, agrees to make
its Pro Rata Share of revolving loans and advances (the “Revolving Loans”) requested by Borrower up
to such Lender’s Revolving Loan Commitment so long as after giving effect to
such Revolving Loans, the sum of the aggregate unpaid principal balance of the
Revolving Loans and the Letter of Credit Obligations does not exceed an amount
up to the sum of the following sublimits (the “Revolving
Loan Limit”):


 


16

















 


(i)                                     Up to eighty-five percent (85%) of the face
amount (less maximum discounts, credits and allowances which may be taken by or
granted to Account Debtors in connection therewith in the ordinary course of
Borrower’s business) of Borrower’s Eligible Accounts; plus


 


(ii)                                  Up to sixty percent (60%) of the lower of
cost or market value of Borrower’s Eligible Inventory (consisting solely of raw
material paper) or Fifteen Million and No/100 Dollars ($15,000,000.00),
whichever is less; plus


 


(iii)                               Up to sixty percent (60%) of the lower of
cost or market value of Borrower’s Eligible Inventory (consisting solely of
work in process) or Five Million and No/100 Dollars ($5,000,000.00) until
June 30, 2005, (which amount shall increase by Five Hundred Thousand and
No/100 Dollars ($500,000.00) on such date and on the same day of each year
thereafter), whichever is less; plus


 


(iv)                              Up to sixty percent (60%) of the lower of
cost or market value of Borrower’s Eligible Inventory (consisting solely of raw
materials other than raw material paper) or Six Hundred Thousand and No/100
Dollars ($600,000.00), whichever is less; minus


 


(v)                                 such reserves as Agent elects, in its
Permitted Discretion, to establish from time to time;


 


provided,
that (x) the sum of the advances with respect to clauses (ii), (iii) and (iv)
above shall at no time exceed Fifteen Million and No/100 Dollars
($15,000,000.00) and (y) the Revolving Loan Limit shall in no event exceed
Forty Million and No/100 Dollars ($40,000,000.00) (the “Maximum Revolving Loan
Limit”) except as such amount may be increased or decreased, upon the
occurrence and during the continuance of an Event of Default, by all Lenders,
in each Lender’s Permitted Discretion.


 


The aggregate unpaid principal balance of the
Revolving Loans shall not at any time exceed the lesser of the (i) Revolving
Loan Limit minus the Letter of Credit Obligations and
(ii) the Maximum Revolving Loan Limit minus the Letter of Credit Obligations.
If at any time the outstanding Revolving Loans exceeds either the Revolving
Loan Limit or the Maximum Revolving Loan Limit, in each case minus the Letter
of Credit Obligations, or any portion of the Revolving Loans and Letter of
Credit Obligations exceeds any applicable sublimit within the Revolving Loan
Limit, Borrower shall immediately, and without the necessity of demand by
Agent, pay to Agent such amount as may be necessary to eliminate such excess
and Agent shall apply such payment to the Revolving Loans to eliminate such
excess; provided that Agent may, in its sole discretion, permit such excess
(the “Interim Advance”) to remain
outstanding and continue to advance Revolving Loans to Borrower on behalf of
Lenders without the consent of any Lender for a period of up to twenty-one (21)
calendar days, so long as (i) the amount of the Interim Advances does not
exceed at any time Two Million and No/100 Dollars ($2,000,000.00), (ii) the
aggregate outstanding principal balance of the Revolving Loans does not exceed
the Maximum Revolving Loan Limit, and (iii) Agent has not been notified by
Requisite Lenders to cease


 


17

















 


making
such Revolving Loans, provided that such twenty-one (21) day calendar period
shall occur no more than twice in any twelve (12) month period. If the Interim
Advance is not repaid in full within twenty-one (21) days of the initial
occurrence of the Interim Advance, no future advances may be made to Borrower
without the consent of all Lenders until the Interim Advance is repaid in full.


 


Neither Agent nor any Lender shall be responsible
for any failure by any other Lender to perform its obligations to make
Revolving Loans hereunder, and the failure of any Lender to make its Pro Rata
Share of any Revolving Loan hereunder shall not relieve any other Lender of its
obligation, if any, to make its Pro Rata Share of any Revolving Loans
hereunder.


 


If Borrower makes a request for a Revolving Loan as
provided herein Agent, at its option and in its sole discretion, shall do
either of the following:


 


(i)                                     advance the amount of the proposed Revolving
Loan to Borrower disproportionately (a “Disproportionate
Advance”)  out of
Agent’s own funds on behalf of Lenders, which advance shall be on the same day
as Borrower’s request therefor with respect to Prime Rate Loans if Borrower
notifies Agent of such request by 2:30 P.M. (Chicago time) on such day, and
request settlement in accordance with Section 18 hereof such that
upon such settlement each Lender’s share of the outstanding Revolving Loans
(including, without limitation, the amount of any Disproportionate Advance)
equals its Pro Rata Share; or


 


(ii)                                  Notify each Lender by telecopy, electronic
mail or other similar form of teletransmission of the proposed advance on the
same day Agent is notified or deemed notified by Borrower of Borrower’s request
for an advance pursuant to this Section 2(a). Each Lender shall
remit, to the demand deposit account designated by Borrower (i) with respect to
Prime Rate Loans, at or prior to 3:00 P.M., Chicago time, on the date of
notification, if such notification is made before 1:00 P.M., Chicago time, or
2:00 P.M., Chicago time, on the Business Day immediately succeeding the date of
such notification, if such notification is made after 1:00 P.M., Chicago time,
and (ii) with respect to LIBOR Rate Loans, at or prior to 2:00 P.M., Chicago
time, on the date such LIBOR Rate Loans are to be advanced, immediately
available funds in an amount equal to such Lender’s Pro Rata Share of such
proposed advance.


 


If
and to the extent that a Lender does not settle with Agent as required under
this Agreement (a “Defaulting Lender”)
Borrower and Defaulting Lender severally agree to repay to Agent forthwith on
demand such amount required to be paid by such Defaulting Lender to Agent,
together with interest thereon, for each day from the date such amount is made
available to Borrower until the date such amount is repaid to Agent (x) in the
case of a Defaulting Lender at the rate published by the Federal Reserve Bank
of New York on the next succeeding Business Day as the “Federal Funds Rate” or
if no such rate is published for any Business Day, at the average rate quoted
for such day for such transactions from three (3) federal funds brokers of
recognized standing selected by Agent, and (y) in the case of Borrower, at the
interest rate applicable at such time for such Loans; provided, that Borrower’s
obligation


 


18

















 


to
repay such advance to Agent shall not relieve such Defaulting Lender of its
liability to Agent for failure to settle as provided in this Agreement.


 


Borrower hereby authorizes Agent, in its sole discretion, to charge any
of Borrower’s accounts or advance Revolving Loans to make any payments of
principal, interest, fees, costs or expenses required to be made under this
Agreement or the Other Agreements.


 


A request for a Revolving Loan shall be made or shall be deemed to be
made, each in the following manner: Borrower shall give Agent same day notice,
no later than 2:30 P.M. (Chicago time) for such day, of its request for a
Revolving Loan as a Prime Rate Loan, and at least two (2) Business Days prior
notice of its request for a Revolving Loan as a LIBOR Rate Loan, in which
notice Borrower shall specify the amount of the proposed borrowing and the
proposed borrowing date; provided, however, that no such request may be made at
a time when there exists an Event of Default or an event which, with the
passage of time or giving of notice, will become an Event of Default. In the
event that Borrower maintains a controlled disbursement account at LaSalle
Bank, each check presented for payment against such controlled disbursement
account and any other charge or request for payment against such controlled
disbursement account shall constitute a request for a Revolving Loan as a Prime
Rate Loan. As an accommodation to Borrower, Agent may permit telephone requests
for Revolving Loans and electronic transmittal of instructions, authorizations,
agreements or reports to Agent by Borrower. Unless Borrower specifically
directs Agent in writing not to accept or act upon telephonic or electronic
communications from Borrower, Agent shall have no liability to Borrower for any
loss or damage suffered by Borrower as a result of Agent’s honoring, in good
faith, of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Agent by Borrower and Agent
shall have no duty to verify the origin of any such communication or the
authority of the Person sending it.


 


Borrower hereby irrevocably authorizes Agent to disburse the proceeds
of each Revolving Loan requested by Borrower, or deemed to be requested by
Borrower, as follows: the proceeds of each Revolving Loan requested under Section 2(a)
shall be disbursed by Agent in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in
accordance with the terms of the written disbursement letter from Borrower, and
in the case of each subsequent borrowing, by wire transfer or Automated
Clearing House (ACH) transfer to such bank account as may be agreed upon by
Borrower and Agent from time to time, or elsewhere if pursuant to a written
direction from Borrower.


 


(b)                                 Term
Loan.


 


Subject to the terms and conditions of this Agreement and the Other
Agreements, on the date that the conditions to the initial Loans are satisfied,
each Lender severally and not jointly agrees to make a term loan to Borrower in
an amount equal to its Pro Rata Share of Twenty-Six Million and No/100 Dollars
($26,000,000.00) against


 


19

















 


Borrower’s
Equipment (the “Term Loan”), but
in any event not in excess of its Term Loan Commitment. Amounts repaid with
respect to the Term Loan may not be reborrowed.


 


(c)                                  Repayments.


 


The Liabilities shall be repaid as follows:


 


(i)                                     Repayment of Revolving Loans. The Revolving Loans and all other
Liabilities (other than the Term Loan) shall be repaid on the last day of the
Original Term or any Renewal Term if this Agreement is renewed pursuant to Section 10
hereof.


 


(ii)                                  Repayment of Term Loan. The Term Loan shall be repaid in
eighty-four (84) equal monthly installments payable on the day that is 30 days
from the date of such advance and on the corresponding day of each month
thereafter (or if there is no corresponding day, on the last day of the month);
provided that any remaining outstanding principal balance of the Term Loan
shall be repaid at the end of the Original Term or any Renewal Term if this
Agreement is renewed pursuant to Section 10 hereof. If any such payment
due date is not a Business Day, then such payment may be made on the next
succeeding Business Day and such extension of time shall be included in the computation
of the amount of interest and fees due hereunder.


 


(iii)                               Mandatory Prepayments of the Term Loan.


 


(A)                              Sales of Assets. Upon receipt of the proceeds of the sale or
other disposition of any Equipment or real property of Borrower which is
subject to a mortgage in favor of Agent, or if any of the Equipment or real
property subject to such mortgage is damaged, destroyed or taken by
condemnation in whole or in part, the proceeds thereof, shall be paid by
Borrower to Agent, for the benefit of Agent and Lenders, as a mandatory
prepayment of the Term Loan, such payment to be applied against the remaining
installments of principal in the inverse order of their maturities until repaid
in full, and then against the other Liabilities, as determined by Agent, in its
sole discretion. In addition to the foregoing, Borrower may retain proceeds
from the disposition of Equipment located at 161 North Jackson, Waterloo,
Wisconsin as of the date hereof.


 


(d)                                 Notes.


 


The Loans shall, in Agent’s and Lenders’ sole
discretion, be evidenced by one or more promissory notes in form and substance
satisfactory to each Lender. However, if such Loans are not so
evidenced, such Loans may be evidenced solely by entries upon the books and
records maintained by Agent and each Lender.


 


20

















 


3.  LETTERS
OF CREDIT.


 


(a)                                  General Terms.


 


Subject to the terms and conditions of this
Agreement and the Other Agreements, during the Original Term or any Renewal
Term, Agent shall, absent the existence of an Event of Default, from time to
time issue, cause to be issued and co-sign for or otherwise guarantee, upon
Borrower’s request, commercial and/or standby Letters of Credit; provided, that
the aggregate undrawn face amount of all such Letters of Credit shall at no
time exceed Five Million and No/100 Dollars ($5,000,000.00). Payments made by
the issuer of a Letter of Credit to any Person on account of any Letter of
Credit shall be immediately payable by Borrower without notice, presentment or
demand and Borrower agrees that each payment made by the issuer of a Letter of
Credit in respect of a Letter of Credit shall constitute a request by Borrower
for a Loan to reimburse such issuer. In the event such Loan is not advanced by
Agent or Lenders for any reason, such reimbursement obligations (whether owing
to the issuer of the Letter of Credit or Agent or Lenders) shall become part of
the Liabilities hereunder and shall bear interest at the rate then applicable
to Revolving Loans constituting Prime Rate Loans until repaid. Borrower shall
remit to Agent, for the benefit of Lenders, a Letter of Credit fee equal to one
and one-half percent (1-1/2%) per annum on the aggregate undrawn face amount of
all Letters of Credit outstanding, which fee shall be payable monthly in arrears
on the last Business Day of each month. Borrower shall also pay on demand the
normal and customary administrative charges of the issuer of the Letter of
Credit for issuance, amendment, negotiation, renewal or extension of any Letter
of Credit.


 


(b)                                 Requests for Letters of
Credit.


 


Borrower shall make requests for Letters of Credit
in writing at least two (2) Business Days prior to the date such Letter of
Credit is to be issued. Each such request shall specify the date such Letter of
Credit is to be issued, the amount thereof, the name and address of the
beneficiary thereof and a description of the transaction to be supported
thereby. Any such notice shall be accompanied by the form of Letter of Credit
requested and any application or reimbursement agreement required by the issuer
of such Letter of Credit. If any term of such application or reimbursement
agreement is inconsistent with this Agreement, then the provisions of this
Agreement shall control to the extent of such inconsistency.


 


(c)                                  Obligations Absolute.


 


Borrower shall be obligated to reimburse the issuer
of any Letter of Credit, or Agent and/or Lenders if Agent and/or Lenders have
reimbursed such issuer on Borrower’s behalf, for any payments made in respect
of any Letter of Credit, which obligation shall be unconditional and
irrevocable and shall be paid regardless of: (i) any lack of validity or
enforceability of any Letter of Credit, (ii) any amendment or waiver of or
consent or departure from all or any provisions of any Letter of Credit, this
Agreement or any Other Agreement, (iii) the existence of any claim, set off,
defense or other right which Borrower or any other Person may have against any
beneficiary of any Letter of Credit or Agent, any Lender or the issuer of the
Letter of Credit, (iv) any draft or other document presented under any Letter
of


 


21

















 


Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect, (v) any
payment under any Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, and (vi)
any other act or omission to act or delay of any kind of the issuer of such
Letter of Credit, Agent, any Lender or any other Person or any other event or
circumstance that might otherwise constitute a legal or equitable discharge of
Borrower’s obligations hereunder unless, arising from the gross negligence or
willful misconduct of the issuer of such Letter of Credit, Agent or any Lender.
It is understood and agreed by Borrower that the issuer of any Letter of Credit
may accept documents that appear on their face to be in order without further
investigation or inquiry, regardless of any notice or information to the
contrary.


 


(d)                                 Expiration Dates of Letters of Credit.


 


The expiration date of each Letter of Credit shall
be no later than the earlier of (i) one (1) year from the date of issuance and
(ii) the thirtieth (30th) day prior to the end of the Original Term or any
Renewal Term. Notwithstanding the foregoing, a Letter of Credit may provide for
automatic extensions of its expiration date for one or more one (1) year
periods, so long as the issuer thereof has the right to terminate the Letter of
Credit at the end of each one (1) year period and no extension period extends
past the thirtieth (30th) day prior to the end of the Original Term or any
Renewal Term.


 


(e)                                  Participation.


 


Immediately upon the issuance of a Letter of Credit
in accordance with this Agreement, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, an undivided interest and participation therein to the
extent of such Lender’s Pro Rata Share (including, without limitation, all
obligations of Borrower with respect thereto), provided, that Agent and Lenders
shall not be liable to reimburse the issuer of the Letter of Credit in the
event that the issuer honors a draw upon a Letter of Credit in error due to
issuer’s gross negligence or willful misconduct. Borrower hereby indemnifies
Agent and each Lender against any and all liability and expense it may incur in
connection with any Letter of Credit unless, arising from the gross negligence
or willful misconduct of the issuer of such Letter of Credit, Agent or any
Lender and agrees to reimburse Agent and each Lender for any payment made by
Agent or any Lender to the issuer.


 


4.  INTEREST, FEES AND CHARGES. 


 


(a)                                  Interest Rate.


 


Subject to the terms and conditions set forth below,
the Loans shall bear interest at the per annum rate of interest set forth in subsection (i),
(ii) or (iii) below:


 


(i)                                     With respect to Prime Rate
Loans, the Applicable Margin in excess of the Prime Rate in effect from time to
time, which shall be payable on the last


 


22

















 


Business Day of each month in arrears. Said rate of interest shall
increase or decrease by an amount equal to each increase or decrease in the
Prime Rate effective on the effective date of each such change in the Prime
Rate.


 


(ii)                                  With respect to LIBOR Rate Loans, the
Applicable Margin in excess of the LIBOR Rate for the applicable Interest
Period, such rate to remain fixed for such Interest Period.  “Interest
Period” shall mean any continuous period of, (1) one, two (2), three
(3) or six (6) months, as selected from time to time by Borrower by irrevocable notice (in writing, by telecopy, telex,
electronic mail or cable) given to Agent not less than two (2) Business Days
prior to the first day of each respective Interest Period; provided that: (A)
each such period occurring after such initial period shall commence on the day
on which the immediately preceding period expires; (B) the final Interest
Period shall be such that its expiration occurs on or before the end of the
Original Term or any Renewal Term; and (C) if for any reason Borrower shall
fail to timely select a period, then such Loans shall continue as, or revert
to, Prime Rate Loans. Interest shall be payable on the last Business Day of
each month in arrears and on the last Business Day of such Interest Period.


 


(iii)                               Upon the occurrence of an Event of Default
and during the continuance thereof, the Loans shall bear interest at the rate
of two percent (2.0%) per annum in excess of the interest rate otherwise
payable thereon, which interest shall be payable on demand. All interest shall
be calculated on the basis of a 360-day year.


 


(b)                                 Other LIBOR Provisions.


 


(i)                                     Subject to the provisions of this Agreement,
Borrower shall have the option (A) as of any date, to convert all or any part
of the Prime Rate Loans to, or request that new Loans be made as, LIBOR Rate
Loans of various Interest Periods, (B) as of the last day of any Interest
Period, to continue all or any portion of the relevant LIBOR Rate Loans as
LIBOR Rate Loans; (C) as of the last day of any Interest Period, to convert all
or any portion of the LIBOR Rate Loans to Prime Rate Loans; and (D) at any
time, to request new Loans as Prime Rate Loans; provided, that Loans may not be
continued as or converted to LIBOR Rate Loans if the continuation or conversion
thereof would violate the provisions of subsections 4(b)(ii) or 4(b)(iii)
of this Agreement or if an Event of Default has occurred.


 


(ii)                                  Agent’s determination of the LIBOR Rate as
provided above shall be conclusive, absent manifest error. Furthermore, if
Agent or any Lender determines, in good faith (which determination shall be
conclusive, absent manifest error), prior to the commencement of any Interest
Period that (A) U.S. Dollar deposits of sufficient amount and maturity for
funding the Loans are not available to Agent or such Lender in the London
Interbank Eurodollar market in the ordinary course of business, or (B) by
reason of circumstances affecting the London Interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the rate of interest to
be applicable to the Loans requested by Borrower to be LIBOR Rate Loans or the
Loans bearing interest at the rates set forth in subsection 4(a)(ii)
of this Agreement shall not represent the


 


23

















 


effective pricing to such Lender for U.S. Dollar deposits of a
comparable amount for the relevant period (such as for example, but not limited
to, official reserve requirements required by Regulation D to the extent not
given effect in determining the rate), Agent shall promptly notify Borrower and
(1) all existing LIBOR Rate Loans shall convert to Prime Rate Loans upon the
end of the applicable Interest Period, and (2) no additional LIBOR Rate Loans
shall be made until such circumstances are cured.


 


(iii)                               If, after the date hereof, the introduction
of, or any change in any applicable law, treaty, rule, regulation or guideline
or in the interpretation or administration thereof by any governmental
authority or any central bank or other fiscal, monetary or other authority
having jurisdiction over Agent or any Lender or its lending offices (a “Regulatory Change”), shall, in the opinion
of counsel to Agent or such Lender, make it unlawful for Agent or such Lender
to make or maintain LIBOR Rate Loans, then Agent shall promptly notify Borrower
and (A) the LIBOR Rate Loans shall immediately convert to Prime Rate Loans on
the last Business Day of the then existing Interest Period or on such earlier
date as required by law and (B) no additional LIBOR Rate Loans shall be made
until such circumstance is cured.


 


(iv)                              If, for any reason, a LIBOR Rate Loan is paid
prior to the last Business Day of any Interest Period or if a LIBOR Rate Loan
does not occur on a date specified by Borrower in its request (other than as a
result of a default by Agent or a Lender), Borrower agrees to indemnify Agent
and each Lender against any loss (including any loss on redeployment of the
deposits or other funds acquired by Agent or such Lender to fund or maintain
such LIBOR Rate Loan) cost or expense incurred by Agent or such Lender as a
result of such prepayment.


 


(v)                                 If any Regulatory Change (whether or not
having the force of law) shall (A) impose, modify or deem applicable any
assessment, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of or loans by, or any other acquisition
of funds or disbursements by, Agent or any Lender; (B) subject Agent or any
Lender or the LIBOR Rate Loans to any Tax or change the basis of taxation of
payments to Agent or any Lender of principal or interest due from Borrower to
Agent or such Lender hereunder (other than a change in the taxation of the overall
net income of Agent or such Lender); or (C) impose on Agent or any Lender any
other condition regarding the LIBOR Rate Loans or Agent’s or any Lender’s
funding thereof, and Agent or any Lender shall determine (which determination
shall be conclusive, absent any manifest error) that the result of the
foregoing is to increase the cost to Agent or such Lender of making or
maintaining the LIBOR Rate Loans or to reduce the amount of principal or
interest received by Agent or such Lender hereunder, then Borrower shall pay to
such party, on demand, such additional amounts as such party shall, from time
to time, determine are sufficient to compensate and indemnify such party from
such increased cost or reduced amount.


 


(vi)                              Each of Agent and each Lender shall receive
payments of amounts of principal of and interest with respect to the LIBOR Rate
Loans free and clear of, and without deduction for, any Taxes. If (A) Agent or
any Lender shall be subject to


 


24

















 


any Tax in respect of any LIBOR Rate Loans or any part thereof or, (B)
Borrower shall be required to withhold or deduct any Tax from any such amount,
the LIBOR Rate applicable to such LIBOR Rate Loans shall be adjusted by Agent
or such Lender to reflect all additional costs incurred by Agent or such Lender
in connection with the payment by Agent or such Lender or the withholding by
Borrower of such Tax and Borrower shall provide Agent or such Lender with a
statement detailing the amount of any such Tax actually paid by Borrower.
Determination by Agent or any Lender of the amount of such costs shall be
conclusive, absent manifest error. If, after any such adjustment, any part of
any Tax paid by Agent or any Lender is subsequently recovered by Agent or such
Lender, such party shall reimburse Borrower to the extent of the amount so
recovered. A certificate of an officer of Agent or any Lender setting forth the
amount of such recovery and the basis therefor shall be conclusive, absent
manifest error.


 


(vii)                           Each request for LIBOR Rate Loans shall be in
an amount not less than One Million and No/100 Dollars ($1,000,000.00), and in
integral multiples of, One Hundred Thousand and No/100 Dollars ($100,000.00).


 


(viii)                        Unless otherwise specified by Borrower, all
Loans shall be Prime Rate Loans.


 


(ix)                                No more than six (6) Interest Periods may be
in effect with respect to outstanding LIBOR Rate Loans at any one time.


 


(c)                                  Fees And Charges.


 


(i)                                     Unused Line Fee: Borrower shall pay to Agent, for the
benefit of Lenders, an unused line fee equal to the product of (A) the Unused
Line Fee Applicable Margin (B) the difference between the Maximum Revolving
Loan Limit and the average daily balance of the Revolving Loans plus the Letter
of Credit Obligations for each month, which fee shall be fully earned by
Lenders and payable monthly in arrears on the first Business Day of each month.
Said fee shall be calculated on the basis of a 360 day year.


 


(ii)                                  Agent Fee: Borrower shall pay to Agent, for its own Account, the fees described
in that certain Fee Letter of even date herewith between Agent and Borrower.


 


(iii)                               Costs and Expenses: Borrower shall reimburse Agent for all
costs and expenses, including, without limitation, legal expenses and
reasonable attorneys’ fees (whether for internal or outside counsel), incurred
by Agent in connection with the (i) documentation and consummation of this
transaction and any other transactions among Borrower, Agent and Lenders,
including, without limitation, Uniform Commercial Code and other public record
searches and filings, overnight courier or other express or messenger delivery,
appraisal costs, surveys, title insurance and environmental audit or review
costs; (ii) collection, protection or enforcement of any


 


25

















 


rights in or to the Collateral; (iii) collection of any Liabilities;
and (iv) administration and enforcement of any of Agent’s and/or any Lender’s
rights under this Agreement or any Other Agreement. Borrower shall also pay all
normal service charges with respect to all deposit accounts maintained by
Borrower with any Lender and LaSalle Bank and any additional services requested
by Borrower from any Lender and LaSalle Bank. All such costs, expenses and
charges shall, if owed to LaSalle Bank, be reimbursed by Agent and Lenders
absent the existence of an Event of Default and in such event, or in the event
not reimbursed by Agent and Lenders or in the event such costs and expenses are
owed to Agent or a Lender, shall constitute Liabilities hereunder, shall be
payable by Borrower to LaSalle on demand, and until paid, shall bear interest
at the highest rate then applicable to Loans hereunder. In addition, following
the occurrence of an Event of Default, Borrower shall reimburse each Lender for
all costs and expenses, including, without limitation, legal expenses and
reasonable attorneys’ fees, incurred by such Lender in connection with the (i)
collection, protection or enforcement of any rights in or to the Collateral;
(ii) collection of any Liabilities; and (iii) administration and enforcement of
any of Lenders’ rights under this Agreement.


 


(iv)                              Capital Adequacy Charge. If Agent or any Lender shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application
thereof, or compliance by Agent or such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank or governmental authority enacted after the date hereof, does or
shall have the effect of reducing the rate of return on such party’s capital as
a consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration such party’s policies with respect to capital
adequacy) by a material amount, then from time to time, after submission by
Agent to Borrower of a written demand therefor (“Capital Adequacy Demand”) together with the certificate
described below, Borrower shall pay to such party such additional amount or
amounts (“Capital Adequacy Charge”) as
will compensate such party for such reduction, such Capital Adequacy Demand to
be made with reasonable promptness following such determination. A certificate
of Agent or such Lender claiming entitlement to payment as set forth above
shall be conclusive in the absence of manifest error. Such certificate shall
set forth the nature of the occurrence giving rise to such reduction, the
amount of the Capital Adequacy Charge to be paid to Agent or such Lender, and
the method by which such amount was determined. In determining such amount, the
applicable party may use any reasonable averaging and attribution method,
applied on a non-discriminatory basis.


 


(d)                                 Maximum Interest.


 


It is the intent of the parties that the rate of interest and other
charges to Borrower under this Agreement and the Other Agreements shall be
lawful; therefore, if for any reason the interest or other charges payable
under this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Agent or any Lender may lawfully
charge Borrower, then the obligation to pay interest and other charges


 


26

















 


shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to Borrower.


 


5.  COLLATERAL.


 


(a)                                  Grant of Security Interest to Agent.


 


As security for the payment of all Loans now or in the future made by
Agent and Lenders to Borrower hereunder and for the payment or other
satisfaction of all other Liabilities, Borrower hereby assigns to Agent, for
the benefit of Agent and Lenders, and grants to Agent, for the benefit of Agent
and Lenders, a continuing security interest in the following property of
Borrower, whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located: (a) all Accounts (whether or not Eligible
Accounts) and all Goods whose sale, lease or other disposition by Borrower has
given rise to Accounts and have been returned to, or repossessed or stopped in
transit by, Borrower; (b) all Chattel Paper, Instruments, Documents and General
Intangibles (including, without limitation, all patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, goodwill,
copyrights, copyright applications, registrations, licenses, software,
franchises, customer lists, tax refund claims, claims against carriers and
shippers, guarantee claims, contract rights, payment intangibles, security
interests, security deposits and rights to indemnification); (c) all Inventory
(whether or not Eligible Inventory); (d) all Goods (other than Inventory),
including, without limitation, Equipment (other than Equipment set forth on
Schedule 5(a) hereto), vehicles and Fixtures; (e) all Investment Property;
(f) all Deposit Accounts, bank accounts, deposits and cash; (g) all
Letter-of-Credit Rights; (h) Commercial Tort Claims listed on Exhibit C hereto
(i) any other property of Borrower now or hereafter in the possession, custody
or control of Agent or any Lender or any agent or any parent, affiliate or
subsidiary of Agent or any Lender or any participant with any Lender in the Loans,
for any purpose (whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise) and (j) all additions and accessions to,
substitutions for, and replacements, products and Proceeds of the foregoing
property, including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of Borrower’s books and records
relating to any of the foregoing and to Borrower’s business.


 


(b)                                 Other Security.


 


Agent, in its Permitted Discretion, without waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the Other
Agreements or any Event of Default, may at any time or times hereafter, but
shall not be obligated to, pay, acquire or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral, provided, that Agent may take such actions with respect to
Permitted Liens only after the occurrence and during the continuance of an
Event of Default. All sums paid by Agent in respect thereof and all costs, fees
and expenses including, without limitation, reasonable attorney fees, all court
costs and all other charges relating thereto incurred by Agent shall constitute
Liabilities, payable by Borrower to Agent on demand and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.


 


27

















 


(c)                                  Possessory Collateral.


 


Immediately upon Borrower’s receipt of any portion of the Collateral
evidenced by an agreement, Instrument or Document, including, without
limitation, any Tangible Chattel Paper and any Investment Property consisting
of certificated securities, Borrower shall deliver the original thereof to
Agent together with an appropriate endorsement or other specific evidence of
assignment thereof to Agent (in form and substance acceptable to Agent). If an
endorsement or assignment of any such items shall not be made for any reason,
Agent is hereby irrevocably authorized, as Borrower’s attorney and
agent-in-fact, to endorse or assign the same on Borrower’s behalf.


 


(d)                                 Electronic Chattel Paper.


 


To the extent that Borrower obtains or maintains any
Electronic Chattel Paper, Borrower shall create, store and assign the record or
records comprising the Electronic Chattel Paper in such a manner that (i) a
single authoritative copy of the record or records exists which is unique,
identifiable and except as otherwise provided in clauses (iv), (v) and (vi)
below, unalterable, (ii) the authoritative copy identifies Agent as the
assignee of the record or records, (iii) the authoritative copy is communicated
to and maintained by the Agent or its designated custodian, (iv) copies or
revisions that add or change an identified assignee of the authoritative copy
can only be made with the participation of Agent, (v) each copy of the
authoritative copy and any copy of a copy is readily identifiable as a copy
that is not the authoritative copy and (vi) any revision of the authoritative
copy is readily identifiable as an authorized or unauthorized revision.


 


6.  PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.


 


Borrower shall, at Agent’s request, at any time and
from time to time, authorize, authenticate, execute and deliver to Agent such
financing statements, documents and other agreements and instruments (and pay
the cost of filing or recording the same in all public offices deemed necessary
or desirable by Agent) and do such other acts and things or cause third parties
to do such other acts and things as Agent may deem necessary or desirable in
its sole discretion in order to establish and maintain a valid, attached and
perfected security interest in the Collateral in favor of Agent (free and clear
of all other liens, claims, encumbrances and rights of third parties
whatsoever, whether voluntarily or involuntarily created, except Permitted
Liens) to secure payment of the Liabilities, and in order to facilitate the
collection of the Collateral. Borrower irrevocably hereby makes, constitutes and
appoints Agent (and all Persons designated by Agent for that purpose) as
Borrower’s true and lawful attorney and agent-in-fact to execute and file such
financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect Agent’s
security interest in the Collateral, provided, however, Agent shall not
exercise its rights under this Section 6 unless Borrower fails to
execute such financing statements, documents, instruments and other agreements
in a timely manner following Agent’s request. Borrower further agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement or of
a financing statement shall be sufficient as a


 


28

















 


financing
statement. Borrower further ratifies and confirms the prior filing by Agent of
any and all financing statements which identify the Borrower as debtor, Agent
as secured party and any or all Collateral as collateral.


 


7.  POSSESSION
OF COLLATERAL AND
RELATED MATTERS.


 


Until otherwise notified by Agent following the
occurrence of an Event of Default, Borrower shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of Borrower’s
business, to (a) sell, lease or furnish under contracts of service any of
Borrower’s Inventory normally held by Borrower for any such purpose; (b) use
and consume any raw materials, work in process or other materials normally held
by Borrower for such purpose; and (c) dispose of obsolete or unuseful
Equipment; including, without limitation, Equipment that was located at 161
North Jackson, Waterloo, Wisconsin provided, however, that a sale in the
ordinary course of business shall not include any transfer or sale in
satisfaction, partial or complete, of a debt owed by Borrower.


 


8.  COLLECTIONS.


 


(a)                                  Borrower shall direct all of its Account
Debtors to make all payments on the Accounts directly to a post office box (the
“Lock Box”) designated by, and under the exclusive
control of, Agent, at a financial institution acceptable to Agent. Borrower
shall establish an account (the “Lock Box Account”) in Agent’s name with a financial institution acceptable to Agent,
into which all payments received in the Lock Box shall be deposited, and into
which Borrower will immediately deposit all payments received by Borrower on
Accounts in the identical form in which such payments were received, whether by
cash or check. If Borrower, any Affiliate or Subsidiary, any shareholder,
officer, director, employee or agent of Borrower or any Affiliate or
Subsidiary, or any other Person acting for or in concert with Borrower shall
receive any monies, checks, notes, drafts or other payments relating to or as
Proceeds of Accounts or other Collateral, Borrower and each such Person shall
receive all such items in trust for, and as the sole and exclusive property of,
Agent and, immediately upon receipt thereof, shall remit the same (or cause the
same to be remitted) in kind to the Lock Box Account. The financial institution
with which the Lock Box Account is established shall acknowledge and agree, in
a manner satisfactory to Agent, that the amounts on deposit in such Lock Box
and Lock Box Account are the sole and exclusive property of Agent, that such
financial institution will follow the instructions of Agent with respect to
disposition of funds in the Lock Box and Lock Box Account without further
consent from Borrower, that such financial institution has no right to setoff
against the Lock Box or Lock Box Account or against any other account
maintained by such financial institution into which the contents of the Lock
Box or Lock Box Account are transferred, and that such financial institution
shall wire, or otherwise transfer in immediately available funds to Agent in a
manner satisfactory to Agent, funds deposited in the Lock Box Account on a
daily basis as such funds are collected. Borrower agrees that all payments made
to such Lock Box Account or otherwise received by Agent, whether in respect of
the Accounts or as Proceeds of other Collateral or otherwise (except for
proceeds of Collateral which are required to be delivered to the holder of a
Permitted Lien which is prior in right of payment), will be applied on account
of the Liabilities in accordance with the terms of this Agreement;


 


29

















 


provided,
that so long as no Event of Default has occurred and is continuing, payments
received by Agent shall not be applied to the unmatured portion of the LIBOR
Rate Loans, but shall be held in a cash collateral account maintained by Agent,
until the earlier of (i) the last Business Day of the Interest Period
applicable to such LIBOR Rate Loan and (ii) the occurrence of an Event of
Default; provided further, that so long as no Event of Default has occurred,
the immediately available funds in such cash collateral account may be
disbursed, at Borrower’s discretion, to Borrower so long as after giving effect
to such disbursement, Borrower’s availability under subsection 2(a)
hereof at such time, equals or exceeds the outstanding Revolving Loans at such
time. Borrower agrees to pay all fees, costs and expenses in connection with
opening and maintaining the Lock Box and Lock Box Account. All of such fees,
costs and expenses if not paid by Borrower, may be paid by Agent and in such
event all amounts paid by Agent shall constitute Liabilities hereunder, shall
be payable to Agent by Borrower upon demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder. All checks,
drafts, instruments and other items of payment or Proceeds of Collateral shall
be endorsed by Borrower to Agent, and, if that endorsement of any such item
shall not be made for any reason, Agent is hereby irrevocably authorized to endorse
the same on Borrower’s behalf. For the purpose of this section, Borrower
irrevocably hereby makes, constitutes and appoints Agent (and all Persons
designated by Agent for that purpose) as Borrower’s true and lawful attorney
and agent-in-fact (i) to endorse Borrower’s name upon said items of payment
and/or Proceeds of Collateral and upon any Chattel Paper, Document, Instrument,
invoice or similar document or agreement relating to any Account of Borrower or
Goods pertaining thereto; (ii) to take control in any manner of any item of
payment or Proceeds thereof and (iii) to have access to any lock box or, upon
the occurrence and during the continuance of an Event of Default, any postal
box into which any of Borrower’s mail is deposited, and open and process all
mail addressed to Borrower and deposited therein.


 


(b)                                 Agent may, at any time and from time to time
after the occurrence and during the continuance of an Event of Default, whether
before or after notification to any Account Debtor and whether before or after
the maturity of any of the Liabilities, (i) enforce collection of any of
Borrower’s Accounts or other amounts owed to Borrower by suit or otherwise;
(ii) exercise all of Borrower’s rights and remedies with respect to proceedings
brought to collect any Accounts or other amounts owed to Borrower; (iii)
surrender, release or exchange all or any part of any Accounts or other amounts
owed to Borrower, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder; (iv) sell or
assign any Account of Borrower or other amount owed to Borrower upon such
terms, for such amount and at such time or times as Agent deems advisable; (v)
prepare, file and sign Borrower’s name on any proof of claim in bankruptcy or
other similar document against any Account Debtor or other Person obligated to
Borrower; and (vi) do all other acts and things which are necessary, in Agent’s
Permitted Discretion, to fulfill Borrower’s obligations under this Agreement
and the Other Agreements and to allow Agent to collect the Accounts or other
amounts owed to Borrower. In addition to any other provision hereof, Agent may
at any time, after the occurrence and during the continuance of an Event of
Default, at Borrower’s expense, notify any parties obligated on


 


30

















 


any
of the Accounts to make payment directly to Agent of any amounts due or to
become due thereunder.


 


(c)                                 For purposes of calculating interest and
fees, Agent shall, within one (1) Business Day after receipt by Agent at its
office in Chicago, Illinois of (i) checks and (ii) cash or other immediately
available funds from collections of items of payment and Proceeds of any
Collateral, apply the whole or any part of such collections or Proceeds against
the Liabilities as follows: (i) first to all costs and expenses of Agent and
Lenders reimbursable under this Agreement and the Other Agreements, (ii) then
to accrued fees and interest due and payable to Agent and Lenders hereunder and
under the Other Agreements and (iii) then to principal of the Loans in such
order as Agent shall determine in its Permitted Discretion. For purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and Proceeds of any Collateral shall be applied in whole or in part against the
Liabilities, as follows: (i) first to all costs and expenses of Agent and
Lenders reimbursable under this Agreement and the Other Agreements, (ii) then
to accrued fees and interest due and payable hereunder and under the Other
Agreements, (iii) then to principal of the Loans, on the day of receipt,
subject to actual collection and (iv) then to LaSalle Bank and its Affiliates
for all amounts due under this Agreement and the Other Agreements. For purposes
of clause (iii) of the order of payment set forth above, the parties hereto
agree that Proceeds of Collateral consisting of fixed assets shall be applied
first against the principal amount of the Term Loan and then to the principal
amount of Revolving Loans, and that Proceeds of all other Collateral shall be
applied first against the principal amount of Revolving Loans and then to the
principal amount of the Term Loan.


 


(d)                                 On a monthly basis, Agent shall deliver to
Borrower an account statement showing all Loans, charges and payments, which
shall be deemed final, binding and conclusive upon Borrower (absent manifest
error) unless Borrower notifies Agent in writing, specifying any error therein,
within thirty (30) days of the date such account statement is sent to Borrower
and any such notice shall only constitute an objection to the items
specifically identified.


 


9.  COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND
SCHEDULES.


 


(a)                                  Monthly Reports.


 


(i) Borrower shall deliver to Agent, in addition to
any other reports, as soon as practicable and in any event: within ten (10)
days after the end of each month, (A) a detailed trial balance of Borrower’s
Accounts aged per invoice date, in form and substance reasonably satisfactory
to Agent including, without limitation, the names and upon the occurrence and
during the continuance of and Event of Default, addresses of all Account
Debtors of Borrower, and (B) notwithstanding the foregoing, and only upon the
request of Agent, a summary and detail of accounts payable (such Accounts and
accounts payable divided into such time intervals as Agent may require in its
Permitted Discretion), including a listing of any held checks; (ii) within ten
(10) days after the end of each month, the general ledger


 


31

















 


inventory
account balance, a perpetual inventory report and Agent’s standard form of
Inventory report then in effect or the form most recently requested from
Borrower by Agent, for Borrower by each category of Inventory, together with a
description of the monthly change in each category of Inventory and (iii)
Borrower shall deliver to Agent an executed borrowing base certificate in
Agent’s then current form on or prior to the tenth (10th) Business
Day of each month, which shall be accompanied by copies (but only if specially
requested by Agent) of Borrower’s sale journal, cash receipts journal and
credit memo journal for the relevant period. Such report shall reflect the
activity of Borrower with respect to Accounts for the immediately preceding
month, and shall be in a form and with such specificity as is satisfactory to
Agent and shall contain such additional information concerning Accounts as may
be requested by Agent including, without limitation, but only if specifically
requested by Agent, copies of all invoices prepared in connection with such
Accounts.


 


(b)                                 Financial Statements.


 


Borrower shall deliver to Agent and each Lender the following financial
information, all of which shall be prepared in accordance with generally
accepted accounting principles consistently applied, and shall be accompanied
by a compliance certificate in the form of Exhibit B hereto, which
compliance certificate shall include a calculation of all financial covenants
contained in this Agreement: (i) no later than thirty (30) days after each
calendar month, copies of internally prepared financial statements, including,
without limitation, balance sheets and statements of income, retained earnings
and cash flow of Borrower, certified by the Chief Financial Officer of
Borrower; (ii) no later than forty-five (45) days after the end of each of the
first three quarters of Borrower’s Fiscal Year, copies of internally prepared
financial statements including, without limitation, balance sheets, statements
of income, retained earnings, cash flows and reconciliation of surplus,
certified by the Chief Financial Officer of Borrower and (iii) no later than
ninety (90) days after the end of each of Borrower’s Fiscal Years, audited
annual financial statements with an unqualified opinion by independent
certified public accountants selected by Borrower and reasonably satisfactory
to Agent, which financial statements shall be accompanied by (A) a letter from
such accountants acknowledging that they are aware that a primary intent of
Borrower in obtaining such financial statements is to influence Agent and
Lenders and that Agent and Lenders are relying upon such financial statements
in connection with the exercise of their rights hereunder, provided, that
Borrower shall only be required to use its reasonable efforts exercised in good
faith to obtain such letter; and (B) copies of any management letters sent to
the Borrower by such accountants.


 


(c)                                  Annual Projections.


 


As soon as practicable and in any event prior to the beginning of each
Fiscal Year, Borrower shall deliver to Agent and each Lender projected balance
sheets, statements of income and cash flow for Borrower, for such Fiscal Year,
which shall include the assumptions used therein, together with appropriate
supporting details as reasonably requested by Agent.


 


32

















 


(d)                                 Public Reporting.


 


Promptly upon the filing thereof, Borrower shall deliver to Agent and
each Lender copies of all registration statements and annual, quarterly,
monthly or other regular reports which Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission, as well as promptly
providing to Agent and each Lender copies of any reports and proxy statements
delivered to Borrower or Holdings’ note holders.


 


(e)                                  Other Information.


 


Promptly following request therefor by Agent, such other business or
financial data, reports, appraisals and projections as Agent may reasonably
request.


 


10.  TERMINATION; AUTOMATIC RENEWAL.


 


THIS AGREEMENT SHALL BE IN EFFECT FROM THE DATE HEREOF
UNTIL AUGUST 15, 2009 (THE “ORIGINAL TERM”) AND SHALL AUTOMATICALLY RENEW
ITSELF FROM YEAR TO YEAR THEREAFTER (EACH SUCH ONE-YEAR RENEWAL BEING REFERRED
TO HEREIN AS A “RENEWAL TERM”) UNLESS (A) THE DUE DATE OF THE LIABILITIES IS
ACCELERATED PURSUANT TO SECTION 16 HEREOF; OR (B) BORROWER OR ANY
LENDER ELECTS TO TERMINATE THIS AGREEMENT AT THE END OF THE ORIGINAL TERM OR AT
THE END OF ANY RENEWAL TERM BY GIVING THE OTHER PARTIES HERETO WRITTEN NOTICE
OF SUCH ELECTION AT LEAST NINETY (90) DAYS PRIOR TO THE END OF THE ORIGINAL
TERM OR THE THEN CURRENT RENEWAL TERM. UPON TERMINATION OF THIS AGREEMENT,
BORROWER SHALL PAY ALL OF THE LIABILITIES IN FULL. If one or more of the events specified in
clauses (A) and (B) occurs or this Agreement otherwise expires, then (i) Agent
and Lenders shall not make any additional Loans on or after the date identified
as the date on which the Liabilities are to be repaid; and (ii) this Agreement
shall terminate on the date thereafter that the Liabilities are paid in full.
At such time as Borrower has repaid all of the Liabilities and this Agreement
has terminated, if Borrower is obtaining new financing from another lender,
Borrower shall deliver such lender’s indemnification of Agent and Lenders, in
form and substance satisfactory to Agent, for checks which Agent has credited
to Borrower’s account, but which subsequently are dishonored for any reason or
for automatic clearinghouse or wire transfers not yet posted to Borrower’s
account.


 


11.  REPRESENTATIONS AND WARRANTIES.


 


Borrower hereby represents and warrants to Agent and each Lender, which representations and warranties (whether appearing
in this Section 11 or elsewhere) shall be true in all material
respects at the time of Borrower’s execution hereof and the closing of the
transactions described herein or related hereto and shall be remade by Borrower
at the time each Loan is made pursuant to this Agreement, provided, that
representations and warranties


 


33

















 


made
as of a particular date shall be true and correct in all material respects only
as of such date.


 


(a)                                  Financial Statements and Other Information.


 


The financial statements and other information delivered or to be
delivered by Borrower to Agent or any Lender at or prior to the date of this
Agreement fairly present in all material respects the financial condition of
Borrower, and there has been no adverse change in the financial condition, the
operations or any other status of Borrower since the date of the financial
statements delivered to Agent most recently prior to the date of this
Agreement. All written information now or heretofore furnished by Borrower to
Agent or any Lender is true and correct as of the date with respect to which
such information was furnished.


 


(b)                                 Locations.


 


The office where Borrower keeps its books, records and accounts (or
copies thereof) concerning the Collateral, Borrower’s principal place of
business and all of Borrower’s other places of business, locations of
Collateral and post office boxes and locations of bank accounts are as set
forth in Exhibit A and at other locations within the continental United
States of which Agent has been advised by Borrower in accordance with subsection 12(b)(i).
The Collateral, including, without limitation, the Equipment (except any part
thereof which Borrower shall have advised Agent in writing consists of
Collateral normally used in more than one state) is kept, or, in the case of
vehicles, based, only at the addresses set forth on Exhibit A, and at
other locations within the continental United States of which Agent has been
advised by Borrower in writing in accordance with subsection 12(b)(i)
hereof.


 


(c)                                  Loans by Borrower.


 


Borrower has not made any loans or advances to any Affiliate or other
Person except for advances authorized hereunder to employees, officers and
directors of Borrower for travel and other expenses arising in the ordinary
course of Borrower’s business and loans permitted pursuant to
subsection 13(f) hereof.


 


(d)                                 Accounts and Inventory.


 


Each Account or item of Inventory which Borrower shall, expressly or by
implication, request Agent to classify as an Eligible Account or as Eligible
Inventory, respectively, shall, as of the time when such request is made,
conform in all respects to the requirements of such classification as set forth
in the respective definitions of “Eligible Account” and “Eligible Inventory” as
set forth herein and as otherwise established by Agent from time to time.


 


(e)                                  Liens.


 


Borrower is the lawful owner of all Collateral now
purportedly owned or hereafter purportedly acquired by Borrower, free from all
liens, claims, security interests and


 


34

















 


encumbrances
whatsoever, whether voluntarily or involuntarily created and whether or not
perfected, other than the Permitted Liens.


 


(f)                                    Organization,
Authority and No Conflict.


 


Borrower is a corporation duly organized, validly existing and in good standing in the State of Delaware, its state
organizational identification number is 2465768 and Borrower is duly qualified
and in good standing in all states where the nature and extent of the business
transacted by it or the ownership of its assets makes such qualification
necessary or, if Borrower is not so qualified, Borrower may cure any such
failure without losing any of its rights, incurring any liens or material
penalties, or otherwise affecting Lender’s rights. Borrower has the right and
power and is duly authorized and empowered to enter into, execute and deliver
this Agreement and the Other Agreements and perform its obligations hereunder
and thereunder. Borrower’s execution, delivery and performance of this Agreement
and the Other Agreements does not conflict with the provisions of the
organizational documents of Borrower, any statute, regulation, ordinance or
rule of law, or any agreement, contract or other document which may now or
hereafter be binding on Borrower, including, without limitation, the Indenture,
except for conflicts with agreements, contracts or other documents which would
not have a Material Adverse Effect on Borrower, and Borrower’s execution,
delivery and performance of this Agreement and the Other Agreements shall not
result in the imposition of any lien or other encumbrance upon any of
Borrower’s property under any existing indenture, mortgage, deed of trust, loan
or credit agreement or other agreement or instrument by which Borrower or any
of its property may be bound or affected. Holdings’ execution, delivery and
performance of the Continuing Unconditional Guaranty does not conflict with the
Indenture nor will it cause an “Event of Default”, as defined therein.


 


(g)                                 Litigation.


 


There are no actions or proceedings which are pending or, to the best
of Borrower’s knowledge, threatened against Borrower which is, in the
determination of Lender, reasonably likely to have a Material Adverse Effect on
Borrower, and Borrower shall, promptly upon becoming aware of any such pending
or threatened action or proceeding, give written notice thereof to Agent.
Borrower has no Commercial Tort Claims pending other than those set forth on
Exhibit C hereto as Exhibit C may be amended from time to time.


 


(h)                                 Compliance with Laws and Maintenance of Permits.


 


Borrower has obtained all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of
which would have a Material Adverse Effect on Borrower. Borrower is in compliance
in all material respects with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items,


 


35

















 


securities,
ERISA or employee health and safety) the failure to comply with which would
have a Material Adverse Effect on Borrower.


 


(i)                                     Affiliate Transactions.


 


Except as set forth on Schedule 11(i) hereto or as
permitted pursuant to subsection 11(c) hereof, Borrower is not
conducting, permitting or suffering to be conducted, transactions with any
Affiliate other than transactions with Affiliates, the terms of which are no
less favorable to Borrower than the terms upon which such transactions would
have been made had they been made to or with a Person that is not an Affiliate.


 


(j)                                     Names and Trade Names.


 


Borrower’s name has always been as set forth on the
first page of this Agreement and Borrower uses no trade names, assumed names,
fictitious names or division names in the operation of its business, except as
set forth on Schedule 11(j) hereto.


 


(k)                                  Equipment.


 


Except for Permitted Liens, Borrower has good and indefeasible and
merchantable title to and ownership of all Equipment. No Equipment is a Fixture
to real estate unless such real estate is owned by Borrower and is subject to a
mortgage in favor of Agent, or if such real estate is leased, is subject to a
landlord’s agreement in favor of Agent on terms acceptable to Agent, or an
accession to other personal property unless such personal property is subject
to a first priority lien in favor of Agent.


 


(l)                                     Enforceability.


 


This Agreement and the Other Agreements to which Borrower is a party
are the legal, valid and binding obligations of Borrower and are enforceable
against Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally.


 


(m)                               Solvency.


 


Borrower is, after giving effect to the transactions contemplated
hereby, solvent, able to pay its debts as they become due, has capital
sufficient to carry on its business, now owns property having a value both at
fair valuation and at present fair saleable value greater than the amount
required to pay its debts, and will not be rendered insolvent by the execution
and delivery of this Agreement or any of the Other Agreements or by completion
of the transactions contemplated hereunder or thereunder.


 


36

















 


(n)                                 Indebtedness.


 


Except as set forth on Schedule 11(n) hereto, and as permitted
under subsection 13(b) hereof, Borrower is not obligated (directly
or indirectly), for any loans or other indebtedness for borrowed money other
than the Loans.


 


(o)                                 Margin Security and Use of Proceeds.


 


Borrower does not own any margin securities, and none of the proceeds
of the Loans hereunder shall be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.


 


(p)                                 Parent,
Subsidiaries and Affiliates.


 


Except as set forth on Schedule 11(p) hereto, Borrower has no Parents, Subsidiaries or other Affiliates or divisions, nor is
Borrower engaged in any joint venture or partnership with any other Person.


 


(q)                                 No
Defaults.


 


Borrower is not in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does Borrower
know of any dispute regarding any contract, lease or commitment which would
have a Material Adverse Effect on Borrower.


 


(r)                                    Employee Matters.


 


There are no controversies pending or threatened between Borrower and
any of its employees, agents or independent contractors other than employee
grievances arising in the ordinary course of business which would not, in the
aggregate, have a Material Adverse Effect on Borrower, and Borrower is in
compliance with all federal and state laws respecting employment and employment
terms, conditions and practices except for such non-compliance which would not
have a Material Adverse Effect on Borrower.


 


(s)                                  Intellectual Property.


 


Borrower possesses adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, tradestyles and
trade names to continue to conduct its business as heretofore conducted by it
except to the extent that the failure to possess such items would not have a
Material Adverse effect on Borrower.


 


37

















 


(t)                                    Environmental Matters.


 


Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder, except for such violations which would not
have a Material Adverse Effect, and the operations of the Borrower comply in
all material respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder, except for such
violations which would not have a Material Adverse Effect. There has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other Person, nor is any pending or
to the best of the Borrower’s knowledge threatened with respect to any non-compliance
with or violation of the requirements of any Environmental Law by the Borrower
or the release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects the Borrower or its
business, operations or assets or any properties at which the Borrower has
transported, stored or disposed of any Hazardous Materials. Borrower has no
material liability (contingent or otherwise) in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling, production
or disposal of any Hazardous Materials unless the foregoing could not
reasonably be expected to have a Material Adverse Effect on Borrower.


 


(u)                                 ERISA Matters.


 


Borrower has paid and discharged all obligations and liabilities
arising under ERISA of a character which, if unpaid or unperformed, might
result in the imposition of a lien against any of its properties or assets.


 


(v)                                 Indenture.


 


(i) The Liabilities of Borrower to Agent and Lenders, including,
without limitation, the Loans, constitutes “Permitted
Indebtedness” and “Guarantor
Senior Indebtedness”, each under and as defined in the Indenture;
(ii) Borrower is a Subsidiary Guarantor under and as defined in the Indenture;
and (iii) the Notes under the Indenture are junior and subordinate in right of
payment to the prior payment in full in immediately available funds of the
Liabilities, including the Loans; (iv) there is no “Designated Senior Indebtedness” under and as defined in the
Indenture other than the Liabilities to Agent and Lenders; (v) this Agreement
constitutes the “Credit Agreement” under
and as defined in the Indenture; (vi) there is no “Senior Indebtedness” under and as defined in the Indenture
other than the indebtedness of Holdings under the Amended and Restated
Continuing Unconditional Guaranty executed in favor of Agent, for the benefit
of Lenders by Holdings and dated of even date herewith (the “Holdings Guaranty”); and (vii) the
indebtedness of Holdings to Agent, for the benefit of Lenders under the
Holdings Guaranty constitutes “Senior Indebtedness” under the Indenture.


 


38

















 


12.  AFFIRMATIVE COVENANTS.


 


Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains Requisite Lenders’ prior
written consent waiving or modifying any of Borrower’s covenants hereunder in
any specific instance, Borrower covenants and agrees as follows:


 


(a)                                  Maintenance of Records.


 


Borrower shall at all times keep accurate and complete books, records
and accounts with respect to all of Borrower’s business activities, in
accordance with sound accounting practices and generally accepted accounting
principles consistently applied, and shall keep such books, records and
accounts, and any copies thereof, only at the addresses indicated for such
purpose on Exhibit A If any such real property is leased, it shall be
subject to a landlord’s agreement in favor of Agent on terms acceptable to
Agent.


 


(b)                                 Notices.


 


Borrower shall:


 


(i)                                     Locations.   Promptly (but in no event
more than ten (10) days after the occurrence thereof) notify Agent of the
opening of a new business location that is material to Borrower’s business, the
closing of any existing business location that is material to Borrower’s
business or, any change in the location of Borrower’s books, records and
accounts (or copies thereof), and the opening or closing of any bank account


 


(ii)                                  Eligible Accounts and Inventory. Promptly upon becoming aware thereof,
notify Agent if any Account or Inventory identified by Borrower to Agent as an
Eligible Account or Eligible Inventory becomes ineligible for any reason,
provided that, unless an Event of Default has and is continuing, Borrower may
notify Agent of such event with respect to Eligible Accounts with a face amount
of less than $500,000.00 in the aggregate in its ordinary monthly reporting
pursuant to subsection 9(a) of this Agreement.


 


(iii)                               Litigation and Proceedings. Promptly upon becoming aware thereof,
notify Agent and each Lender of any actions or proceedings which are pending or
threatened against Borrower which might have a Material Adverse Effect on
Borrower and of any Commercial Tort Claims of Borrower which may arise, which
notice shall constitute Borrower’s authorization to amend Exhibit C to add such
Commercial Tort Claim.


 


(iv)                              Names and Trade Names. Notify Agent within ten (10) days of the
change of its name or the use of any trade name, assumed name, fictitious name
or division name not previously disclosed to Agent in writing.


 


(v)                                 ERISA Matters. Promptly notify Agent of (x) the occurrence
of any “reportable event” (as defined in ERISA) which might result in the
termination by


 


39

















 


the Pension Benefit Guaranty Corporation (the “PBGC”) of any employee benefit plan (“Plan”) covering any officers or employees
of the Borrower, any benefits of which are, or are required to be, guaranteed
by the PBGC, (y) receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor or (z) its
intention to terminate or withdraw from any Plan.


 


(vi)                              Environmental Matters. Immediately notify Agent and each Lender
upon becoming aware of any investigation, proceeding, complaint, order,
directive, claim, citation or notice with respect to any non-compliance with or
violation of the requirements of any Environmental Law by Borrower or the
generation, use, storage, treatment, transportation, manufacture handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter which affects Borrower or its business operations or
assets or any properties at which Borrower has transported, stored or disposed
of any Hazardous Materials unless, the foregoing could not reasonably be expected
to have a Material Adverse Effect on Borrower.


 


(vii)                           Default; Material Adverse Change. Promptly advise Agent and each Lender of
any material adverse change in the business, assets, liabilities, operations or
condition, financial or otherwise, of Borrower, the occurrence of any Event of
Default hereunder or the occurrence of any event which, if uncured, will become
an Event of Default after notice or lapse of time (or both).


 


All
of the foregoing notices shall be provided by Borrower to Agent in writing.


 


(c)                                  Compliance
with Laws and Maintenance of Permits.


 


Borrower shall maintain all
governmental consents, franchises, certificates, licenses, authorizations,
approvals and permits, the lack of which would have a Material Adverse Effect
on Borrower and Borrower shall remain in compliance with all applicable
federal, state, local and foreign statutes, orders, regulations, rules and
ordinances (including, without limitation, Environmental Laws and statutes,
orders, regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, ERISA or employee health
and safety) the failure with which to comply would have a Material Adverse
Effect on Borrower.


 


(d)                                 Inspection and Audits.


 


Borrower shall permit Agent and Lenders, or any
Persons designated by Agent, to call at Borrower’s places of business at any
reasonable times, and, without hindrance or delay, to inspect the Collateral
and to inspect, audit, check and make extracts from Borrower’s books, records,
journals, orders, receipts and any correspondence and other data relating to
Borrower’s business, the Collateral or any transactions between the parties
hereto, and shall have the right to make such verification concerning
Borrower’s business as Agent may consider reasonable under the circumstances.
Borrower shall furnish to Agent such information relevant to Agent’s and/or any
Lender’s rights under this Agreement and the Other Agreements as Agent shall at
any time and from time to time reasonably request.


 


40

















 


Agent,
through its officers, employees or agents shall have the right, at any
reasonable time and from time to time, in Agent’s name, to verify the validity,
amount or any other matter relating to any of Borrower’s Accounts, by mail,
telephone, telecopy, electronic mail or otherwise, provided that prior to the
occurrence of an Event of Default, Agent shall conduct such verification in
Borrower’s name. Borrower authorizes Agent and Lenders to discuss the affairs,
finances and business of Borrower with any officers, employees or directors of
Borrower or with its Parent or any Affiliate or the officers, employees or
directors of its Parent or any Affiliate, and to discuss the financial
condition of Borrower with Borrower’s independent public accountants. Any such
discussions shall be without liability to Agent or any Lender or to Borrower’s
independent public accountants. Borrower shall pay to Agent all customary fees
and all costs and out-of-pocket expenses incurred by Agent in the exercise of
its rights under this subsection 12(d), and all of such fees, costs
and expenses shall constitute Liabilities hereunder, shall be payable on demand
and, until paid, shall bear interest at the highest rate then applicable to Loans
hereunder; provided, that, prior to the occurrence and continuance of an Event
of Default, the maximum amount Borrower shall be required to pay Agent with
respect to the foregoing shall be Thirty Thousand and No/100 Dollars
($30,000.00) per Fiscal Year of Borrower, plus all costs and out-of-pocket
expenses incurred by Agent in the exercise of its rights under this subsection 12(d).


 


(e)                                  Insurance. 


 


Borrower shall:


 


(i)                                     Keep the Collateral properly housed and
insured for the full insurable value thereof against loss or damage by fire,
theft, explosion, sprinklers, collision (in the case of motor vehicles) and
such other risks as are customarily insured against by Persons engaged in
businesses similar to that of Borrower, with such companies, in such amounts,
with such deductibles, and under policies in such form, as shall be
satisfactory to Agent. Original (or certified) copies of such policies of
insurance have been or shall be, within ninety (90) days of the date hereof or
as soon thereafter as such policies are issued by the insurer, delivered to
Agent, together with evidence of payment of all premiums therefor, and shall
contain an endorsement, in form and substance acceptable to Agent, showing loss
under such insurance policies payable to Agent, for the benefit of Agent and
Lenders. Such endorsement, or an independent instrument furnished to Agent,
shall provide that the insurance company shall give Agent at least thirty (30)
days written notice before any such policy of insurance is altered or canceled
and that no act, whether willful or negligent, or default of Borrower or any
other Person shall affect the right of Agent to recover under such policy of
insurance in case of loss or damage. In addition, Borrower shall cause to be
executed and delivered to Agent an assignment of proceeds of its business
interruption insurance policies. Borrower hereby directs all insurers under all
policies of insurance to pay all proceeds payable thereunder directly to Agent
as it relates to the Collateral. Borrower irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent) as
Borrower’s true and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance, as such
policies relate to the Collateral, endorsing the name of Borrower on any check,


 


41

















 


draft, instrument or other item of payment for the proceeds of such
policies of insurance and making all determinations and decisions with respect
to such policies of insurance, provided however, that if no Event of Default
shall have occurred and is continuing, Borrower may make, settle and adjust
claims involving less than $5,000,000.00 in the aggregate without Agent’s
consent.


 


(ii)                                  Maintain, at its expense, such public
liability and third party property damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower with such companies and in
such amounts, with such deductibles and under policies in such form as shall be
reasonably satisfactory to Agent and original (or certified) copies of such
policies have been or shall be, within ninety (90) days after the date hereof
or as soon thereafter as such policies are issued by the insurer, delivered to
Agent, together with evidence of payment of all premiums therefor; each such
policy shall contain an endorsement showing Agent and Lenders as additional
insureds thereunder and providing that the insurance company shall give Agent
at least thirty (30) days written notice before any such policy shall be
altered or canceled.


 


If
Borrower at any time or times hereafter shall fail to obtain or maintain any of
the policies of insurance required above or to pay any premium relating
thereto, then Agent, without waiving or releasing any obligation or default by
Borrower hereunder, may (but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such premiums and take such other
actions with respect thereto as Agent deems advisable. Such insurance, if
obtained by Agent, may, but need not, protect Borrower’s interests or pay any
claim made by or against Borrower with respect to the Collateral. Such
insurance may be more expensive than the cost of insurance Borrower may be able
to obtain on its own and may be cancelled only upon Borrower providing evidence
that it has obtained the insurance as required above. All sums disbursed by
Agent in connection with any such actions, including, without limitation, court
costs, expenses, other charges relating thereto and reasonable attorneys’ fees,
shall constitute Loans hereunder, shall be payable on demand by Borrower to
Agent and, until paid, shall bear interest at the highest rate then applicable
to Loans hereunder.


 


(f)                                    Collateral.


 


Borrower shall keep the Collateral in good
condition, repair and order and shall make all necessary repairs to the
Equipment and replacements thereof so that the operating efficiency and the
value thereof shall at all times be preserved and maintained. Borrower shall
permit Agent and Lenders to examine any of the Collateral at any reasonable
times and wherever the Collateral may be located and, Borrower shall,
immediately upon request therefor by Agent, deliver to Agent any and all
evidence of ownership of any of the Equipment including, without limitation,
certificates of title and applications of title. Borrower shall, at the request
of Agent, indicate on its records concerning the Collateral a
notation, in form satisfactory to Agent, of the security interest of Agent
hereunder.


 


42

















 


(g)                                 Use of Proceeds.


 


All monies and other property obtained by Borrower
from Agent and Lenders pursuant to this Agreement shall be used solely for
business purposes of Borrower.


 


(h)                                 Taxes.


 


Borrower shall file all required tax returns and pay
all of its taxes when due, subject to any extensions granted by the applicable
taxing authority, including, without limitation, taxes imposed by federal,
state or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that Borrower shall have the right to contest the payment
of such taxes in good faith by appropriate proceedings so long as (i) a reserve
is established on the books of Borrower in such amount as is required under
generally accepted accounting principles or the amount so contested is shown on
Borrower’s financial statements if such amount is greater than the reserve
established on the books of Borrower; and (ii) the contesting of any such payment
does not give rise to a lien for taxes other than Permitted Liens. If Borrower
fails to pay any such taxes and in the absence of any such contest by Borrower,
Agent may (but shall be under no obligation to) advance and pay any sums
required to pay any such taxes and/or to secure the release of any lien
therefor, and any sums so advanced by Agent shall constitute Loans hereunder,
shall be payable by Borrower to Agent on demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.


 


(i)                                     Intellectual
Property.


 


Borrower shall maintain adequate licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and trade names to continue its business as
heretofore conducted by it or as hereafter conducted by it unless, the failure
to maintain any of the foregoing could not reasonably be expected to have a
Material Adverse Effect on Borrower.


 


(j)                                     Checking Accounts and Cash Management Services.


 


Borrower shall maintain its controlled disbursement
account with LaSalle Bank. Normal charges shall be
assessed thereon in accordance with Schedule 12(j) attached hereto
and made a part hereof. Although no compensating balance is required, Borrower
must keep monthly balances in order to merit earnings credits which will cover
LaSalle Bank’s service charges for demand deposit account activities. In
addition, Borrower shall enter into agreements with LaSalle Bank for standard
cash management services. Borrower shall be responsible for all normal charges
assessed thereon.


 


(k)                                  Excess Availability.


 


Borrower shall, at all times
maintain Excess Availability of at least
$4,000,000.00.


 


43

















 


13. NEGATIVE COVENANTS.


 


Until payment and satisfaction
in full of all Liabilities and termination of this Agreement, unless Borrower
obtains Requisite Lenders’ prior written consent waiving or modifying any of
Borrower’s covenants hereunder in any specific instance, Borrower agrees as
follows:


 


(a)                                  Guaranties.


 


Borrower shall not assume,
guarantee or endorse, or otherwise become liable in connection with, the
obligations of any Person, except by endorsement of instruments for deposit or
collection or similar transactions in the ordinary course of business and
except for ordinary course indemnity provisions contained in any lease or loan
agreement otherwise permitted under this Agreement, indemnities given in
connection with the sale of Inventory or other asset dispositions permitted
hereunder and guarantees of the indebtedness issued pursuant to the Indenture.


 


(b)                                 Indebtedness.


 


Borrower shall not create, incur, assume or become obligated (directly or indirectly), for any
loans or other indebtedness for borrowed money other than the Loans, except
that Borrower may (i) borrow money from a Person other than Agent and Lenders
on an unsecured and subordinated basis if a subordination agreement in favor of
Agent and Lenders and in form and substance satisfactory to Agent and Requisite
Lenders is executed and delivered to Agent relative thereto; (ii) maintain its
present indebtedness listed on Schedule 11(n) hereto and may refinance
such indebtedness so long as the aggregate principal amount of the indebtedness
so refinanced shall not be increased and the refinancing shall be on terms and
conditions no more restrictive than the terms and conditions of the
indebtedness to be refinanced; (iii) incur unsecured indebtedness to trade
creditors in the ordinary course of business; (iv) incur purchase money
indebtedness or capitalized lease obligations in connection with Capital
Expenditures; (v) incur operating lease obligations; and (vi) enter into
Interest Rate Swap Obligations, as defined in the Indenture, provided that such
Interest Rate Swap Obligations are entered into to protect the Borrower from
fluctuations in interest rates on indebtedness incurred to the extent the
notional principal amount of such Interest Rate Swap Obligations does not
exceed the principal amount of the indebtedness to which such Interest Rate Swap
Obligations relate; (vii) incur indebtedness under Currency Agreements, as
defined in the Indenture, provided that such Currency Agreements do not
increase the indebtedness of Borrower outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder; (viii) incur indebtedness to
Holdings, for so long as such indebtedness is held by Holdings subject to no
lien being held by a Person other than Holdings; (ix) incur additional
unsecured indebtedness in an aggregate principal amount not to exceed
$40,000,000.00 at any one time outstanding; and (x) so long as no Event of
Default shall have occurred and be continuing at the time of or would occur as
a consequence of the incurrence of such indebtedness, incur additional
indebtedness on an unsecured basis if on the date of the incurrence thereof,
after giving effect to the incurrence thereof and the


 


44

















 


application
of the proceeds therefrom, the ratio of Holdings and its Subsidiaries’ EBITDA
to Fixed Charges on a pro forma basis, as defined in the Indenture, is greater
than 2.0 to 1.0.


 


(c)                                  Liens.


 


Borrower shall not grant or
permit to exist (voluntarily or involuntarily) any lien, claim, security
interest or other encumbrance whatsoever on any of its assets, other than
Permitted Liens.


 


(d)                                 Mergers,
Sales, Acquisitions, Subsidiaries and Other Transactions Outside the
Ordinary Course of Business.


 


Borrower shall not (i) enter
into any merger or consolidation (except that Holdings or any Subsidiary which
is solvent may merge with Borrower, so long as Borrower is the surviving entity
of such merger); (ii) change the state of Borrower’s organization or enter into
any transaction which has the effect of changing Borrower’s state of
organization; (iii) sell, lease or otherwise dispose of any of its assets other
than in the ordinary course of business; or (iv) except as otherwise permitted
herein, enter into any other transaction outside the ordinary course of
Borrower’s business, including, without limitation, acquisition of a Person or
substantially all of its assets and any purchase, redemption or retirement of
any shares of any class of its stock or any other equity interest, and any
issuance of any shares of, or warrants or other rights to receive or purchase
any shares of, any class of its stock or any other equity interest; provided
that so long as no Event of Default would occur as a result thereof, Borrower
may issue shares of stock or other rights to receive or purchase any shares of
any class of its stock; provided further, that (x) so long as no Event of
Default has occurred and is continuing or would occur as a result thereof, (y)
such redemption does not violate any applicable laws, and (z) after giving
effect to such redemption, Borrower has Excess Availability of at least
$7,000,000.00, Borrower may redeem up to $4,500,000.00 of its Series A
Preferred Stock on April 28, 2005, subject to any extensions. Borrower
shall not form any Subsidiaries or enter into any joint ventures or
partnerships with any other Person unless such Subsidiary, joint venture or
partnership executes and delivers to Agent, for the benefit of Agent and
Lenders, a Continuing Unconditional Guaranty, Security Agreement, Uniform
Commercial Code Financing Statement and such other documents as Agent may
reasonably request granting a lien on the same assets of such Person as is
described in Section 5 hereof.


 


(e)                                  Dividends and Distributions.


 


Borrower shall not declare
or pay any dividend or other distribution, in cash on any class of its stock
(if Borrower is a corporation), provided, that (i) so long as such dividend is
permitted under all applicable laws; and (ii) no Event of Default shall have
occurred prior to the time of, or would occur as a result of such dividend,
Borrower may (V) pay cash dividends or make other intercompany cash transfers
to Holdings in an aggregate amount sufficient to permit Holdings to make
interest payments with respect to the Notes under and as defined in the
Indenture but only to the extent permitted by the subordination provisions
contained in the Indenture; (W) pay cash dividends or make other intercompany


 


45

















 


cash
transfers to Holdings in an amount not to exceed $1,000,000.00 in any Fiscal
Year of Holdings; (X) pay cash dividends to Holdings to the extent such
proceeds are promptly used by Holdings to make payments in respect of
repurchased shares of Holdings common stock from employees provided that such
payments are not greater than or equal to $750,000.00 in any year, (Y) pay the
regularly scheduled dividends on its Series A Preferred Stock and (Z) pay cash
dividends or make other intercompany cash transfers to Holdings to make optional
redemptions, repayments and repurchases of the Notes to the extent not
prohibited by the Indenture, provided that after giving effect to any such
redemption, repayment or repurchase of the Notes, Borrower has Excess
Availability of at least $10,000,000.00 during Fiscal Year 2004 and at least
$7,000,000.00 during each Fiscal Year thereafter.


 


(f)                                    Investments; Loans.


 


Borrower shall not purchase
or otherwise acquire, or contract to purchase or otherwise acquire, the
obligations or stock of any Person, other than direct obligations of the United
States, obligations insured by the Federal Deposit Insurance Corporation and
obligations unconditionally guaranteed by the United States; nor shall Borrower
lend or otherwise advance funds to any Person except for advances made to
employees, officers and directors of Borrower in the ordinary course of
business for bona fide business purposes, officers and directors for travel and
other expenses arising in the ordinary course of business and loans to
employees, officers and directors of Borrower in the ordinary course of
business for bona fide business purposes not exceeding Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) in the aggregate outstanding for all
Persons at any one time and loans described on Schedule 13(f).
Notwithstanding the foregoing, Borrower may (i) make loans to employees,
officers and directors of Borrower to finance the purchase of the “Qualified Capital Stock”, as defined in
the Indenture, not to exceed $500,000.00 at any one time outstanding; (ii)
enter into “Currency Agreements”, as
defined in the Indenture, and “Interest Rate
Swap Obligations”, as defined in the Indenture, entered into in the
ordinary course of Borrower’s business and otherwise in compliance with this
Agreement; (iii) make investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon
bankruptcy or insolvency of such trade creditors or customers; and (iv) make
investments as a result of consideration received in connection with a sale of
assets permitted hereunder.


 


(g)                                 Fundamental
Changes, Line of Business.


 


Borrower shall not amend its
organizational documents or change its Fiscal Year or enter into a new line of
business materially different from Borrower’s current business unless (i) such
actions would not have a Material Adverse Effect on the Borrower; (ii) such
actions would not affect the obligations of Borrower to Agent under this
Agreement and the Other Agreements, (iii) such actions would not affect the interpretation of any of the terms of this Agreement or the Other
Agreements and (iv) Agent has received ten (10) days prior written notice of
such amendment or change.


 


46






















 


(h)                                 Equipment.


 


Borrower shall not (i) permit any Equipment to
become a Fixture to real estate unless such real estate is owned by Borrower
and is subject to a mortgage in favor of Agent, or if such real estate is
leased, is subject to a landlord’s agreement in favor of Agent on terms
acceptable to Agent, or (ii) permit any Equipment to become an accession to any
other personal property unless such personal property is subject to a first
priority lien in favor of Agent.


 


(i)                                     Affiliate
Transactions.


 


Except as set forth on Schedule 11(i)
hereto or as permitted pursuant to subsection 11(c) hereof,
Borrower shall not conduct, permit or suffer to be conducted, transactions with Affiliates other than transactions pursuant to terms that are no
less favorable to Borrower than the terms upon which such transactions would
have been made had they been made to or with a Person that is not an Affiliate,
provided that Borrower may make payments (whether for fees, as compensation for
services or otherwise) to (i) New House Capital Management formerly known as
Paige Charters, Inc. in an aggregate amount not to exceed $724,730.00 in Fiscal
Year 2003, which amount may be increased each Fiscal Year by ten percent (10%)
of the prior Fiscal Year’s permitted amount; and (ii) Novamil Corporation under
that certain Management Agreement dated April 28, 1995 by and between PPC
Acquisitions, Inc. and Novamil Corporation, as in effect as of the date hereof,
in an aggregate amount not to exceed $838,249.00 in any Fiscal Year plus any
cost of living increases provided for in such Management Agreement.


 


(j)                                     Settling of Accounts.


 


Borrower shall not settle or adjust any Account identified by Borrower
as an Eligible Account or with respect to which the Account Debtor is an
Affiliate without the consent of Agent, except for ordinary course discounts,
credits or allowances which reduce the availability set forth in Subsection (2)(a)
of this Agreement provided, that following the occurrence and during the
continuance of an Event of Default, Borrower shall not settle or adjust any
Account without the consent of Agent.


 


14. FINANCIAL
COVENANTS.


 


Borrower shall maintain and keep in full force and effect each of the
financial covenants set forth below:


 


(a)                                  Fixed Charge Coverage.


 


As of the last day of each
fiscal quarter ending on the dates set forth below, for the twelve (12) month
period ending on such date, commencing September 30, 2004, Borrower shall
not permit the ratio of its EBITDA to Fixed Charges to be less than the ratio
set forth below:


 


47

















 


	
  Date

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  September 30, 2004
  through March 31, 2005

  	
   

  	
  1.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  June 30, 2005

  	
   

  	
  1.10 to 1.00

  
	
   

  	
   

  	
   

  
	
  September 30, 2005

  	
   

  	
  1.15 to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31, 2005

  	
   

  	
  1.20 to 1.00

  



 


Thereafter,
as of the last day of each fiscal quarter, for the twelve (12) month period
ending on such date, Borrower shall not permit the ratio of EBITDA to Fixed
Charges to be less than 1.25 to 1.0.


 


(b)                                 Leverage Ratio Coverage.


 


As of the last day of each
fiscal quarter ending on the dates set forth below, for the twelve (12) month
period ending on such date, commencing September 30, 2004, Borrower shall
not permit the ratio of its aggregate indebtedness for borrowed money
(including capitalized leases) to EBITDA to exceed the ratio set forth below:


 


	
  Date

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  September 30,
  2004

  	
   

  	
  4.50
  to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31,
  2004

  	
   

  	
  4.75
  to 1.00

  
	
   

  	
   

  	
   

  
	
  March 31,
  2005

  	
   

  	
  4.00
  to 1.00

  
	
   

  	
   

  	
   

  
	
  June 3,
  2005

  	
   

  	
  3.50
  to 1.00

  
	
   

  	
   

  	
   

  
	
  September 30,
  2005

  	
   

  	
  3.25
  to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31,
  2005

  	
   

  	
  3.25
  to 1.00

  



 


Thereafter, as of the last
day of each fiscal quarter, for the twelve (12) month period ending on such
date, Borrower shall not permit the ratio of its aggregate indebtedness for
borrowed money (including capitalized leases) to EBITDA to exceed 3.00 to 1.00.


 


15. DEFAULT.


 


The occurrence of any one or
more of the following events shall constitute an “Event of Default” by Borrower hereunder:


 


(a)                                  Payment.


 


The failure of any Obligor
to pay within five (5) days of when due, declared due, or demanded by Agent, at
the request of the Requisite Lenders, any of the Liabilities.


 


48

















 


(b)                                 Breach of this Agreement and the Other Agreements.


 


The failure of any Obligor
to perform, keep or observe any of the covenants, conditions, promises,
agreements or obligations of such Obligor under this Agreement or any of the
Other Agreements; provided that any such failure by Borrower under subsections
12(a), 12(b)(i), (iv), (v), (vi), 12(c), 12(h) and 12(i) of this Agreement shall
not constitute an Event of Default hereunder until the fifteenth (15th)
day following the occurrence thereof.


 


(c)                                  Breaches of Other Obligations.


 


The failure of any Obligor
to perform, keep or observe (after any applicable notice and cure period) any
of the covenants, conditions, promises, agreements or obligations of such
Obligor under any other agreement with any Person including, without
limitation, LaSalle National Leasing Corporation if such failure could
reasonably be expected to have a Material Adverse Effect on such Obligor.


 


(d)                                 Breach of Representations and Warranties.


 


The making or furnishing by
any Obligor, Agent or any Lender of any representation, warranty, certificate,
schedule, report or other communication within or in connection with this
Agreement or the Other Agreements or in connection with any other agreement
between such Obligor and Agent or any Lender, which is untrue or misleading in
any material respect as of the date made.


 


(e)                                  Loss of Collateral.


 


The loss, theft, damage or destruction
of, or (except as permitted hereby) sale, lease or furnishing under a contract
of service of, any of the Collateral. Notwithstanding the foregoing, loss,
theft, damage or destruction (a “Loss”)
of any of the Collateral shall not constitute an Event of Default hereunder if,
with respect to Losses involving any Collateral, (i) to the extent that such
Losses involve Collateral which is insured, coverage is not denied or excluded
by the insurer and Agent is in receipt of all insurance proceeds relative
thereto within one hundred eighty (180) days of the occurrence of such Loss; or
(ii) to the extent that such Losses involve Collateral which is uninsured or
for which coverage is denied or excluded by the insurer or for which Agent does
not receive the proceeds within one hundred eighty (180) days of the occurrence
of such Loss, such Losses involve Collateral worth less than Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00) in the aggregate for all
such events during any year of the Original Term or any Renewal Term. With
respect to determining the value of the Collateral, such valuation shall be
determined by Agent in its Permitted Discretion.


 


(f)                                    Levy,
Seizure or Attachment.


 


The making by any Person of
any levy, seizure or attachment upon any of Borrower’s assets to the extent
such assets have an aggregate value in excess of $2,500,000.00 as determined by Agent in its Permitted Discretion.


 


49

















 


(g)                                 Bankruptcy or Similar Proceedings.


 


The commencement of any
proceedings in bankruptcy by or against any Obligor or for the liquidation or
reorganization of any Obligor, or alleging that such Obligor is insolvent or
unable to pay its debts as they mature, or for the readjustment or arrangement
of any Obligor’s debts, whether under the United States Bankruptcy Code or
under any other law, whether state or federal, now or hereafter existing, for
the relief of debtors, or the commencement of any analogous statutory or
non-statutory proceedings involving any Obligor; provided, however, that if
such commencement of proceedings against such Obligor is involuntary, such
action shall not constitute an Event of Default unless such proceedings are not
dismissed within forty-five (45) days after the commencement of such
proceedings, though Agent and Lenders shall continue to make Loans to and
issue, or cause to be issued, Letters of Credit on behalf of Borrower during
such forty-five (45) day period or, if earlier, until such proceedings are
dismissed so long as a financing order in form and substance satisfactory to
Agent has been entered by a court having jurisdiction over such proceeding.


 


(h)                                 Appointment of Receiver.


 


The appointment of a
receiver or trustee for any Obligor, for any of the Collateral or for any
substantial part of any Obligor’s assets or the institution of any proceedings
for the dissolution, or the full or partial liquidation, or the merger or
consolidation, of any Obligor which is a corporation, limited liability company
or a partnership; provided, however, that if such appointment or commencement
of proceedings against such Obligor is involuntary, such action shall not
constitute an Event of Default unless such appointment is not revoked or such
proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings, though Agent and Lenders shall continue to
make Loans to and issue, or cause to be issued, Letters of Credit on behalf of
Borrower during such forty-five (45) day period or, if earlier, until such
appointment is revoked or such proceedings are dismissed so long as a financing
order in form and substance satisfactory to Agent has been entered by a court
having jurisdiction over such proceeding.


 


(i)                                     Judgment.


 


The entry of any judgment or
orders aggregating in excess of $1,000,000.00 against any Obligor which remains
unsatisfied or undischarged and in effect for thirty (30) days after such entry
without a stay of enforcement or execution.


 


(j)                                     Dissolution of Obligor.


 


The dissolution of any
Obligor which is a partnership, limited liability company, corporation or other
entity.


 


(k)                                  Default or Revocation of Guaranty.


 


The occurrence of an event
of default under, or the revocation or termination of, any
agreement, instrument or document executed and delivered by any Person to Agent
or


 


50

















 


any
Lender pursuant to which such Person has guaranteed to Agent and Lenders the
payment of all or any of the Liabilities or has granted Agent a security
interest in or lien upon some or all of such Person’s real and/or personal
property to secure the payment of all or any of the Liabilities.


 


(1)                                  Criminal Proceedings.


 


The institution in any court
of a criminal proceeding against any Obligor which would have a Material
Adverse Effect on such Obligor, or the indictment of any Obligor for any crime
other than traffic and boating tickets and misdemeanors not punishable by jail
terms.


 


(m)                               Change of Control.


 


(i) The failure of Robert E.
Milhous and Paul B. Milhous to directly or indirectly own and have voting
control of at least Fifty and one-tenth percent (50.1%) in the aggregate of the
issued and outstanding voting equity interests of Holdings, (ii) the failure of
Holdings to own and have voting control of at least one hundred percent (100%)
of the issued and outstanding voting equity interest of Borrower or (iii) a “Change of Control” under and as defined in the Indenture
occurs; provided that the merger of Holdings with and into Borrower shall not
constitute an Event of Default so long as Borrower is the surviving entity of
such merger.


 


(n)                                 Material Adverse Change.


 


Any material adverse change
in the Collateral, business, assets, liabilities, operations or condition,
financial or otherwise of any Obligor, as determined by Requisite Lenders in
their sole reasonable judgment or the occurrence of any event which, in
Requisite Lenders’ reasonable judgment, could have a Material Adverse Effect.


 


(o)                                 Indenture Event of Default.


 


The occurrence of an Event
of Default under and as defined in the Indenture or any
amendment of said Indenture.


 


16.                                 REMEDIES UPON AN EVENT OF DEFAULT.


 


(a)                                  Upon the occurrence and during the
continuance of an Event of Default described in subsection 15(g)
hereof, all of the Liabilities shall immediately and automatically become due
and payable, without notice of any kind. Upon the occurrence of any other Event
of Default, all Liabilities may, at the option of Requisite Lenders, and
without demand, notice or legal process of any kind, be declared, and immediately
shall become, due and payable.


 


(b)                                 Upon the occurrence and during the
continuance of an Event of Default, Agent may exercise from time to time any
rights and remedies available to it under the Uniform Commercial Code and any
other applicable law in addition to, and not in lieu of,


 


51

















 


any
rights and remedies expressly granted in this Agreement (including, without
limitation, the right to decrease the Maximum Loan Limit) or in any of the
Other Agreements and all of Agent’s rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law. In particular, but not by way of
limitation of the foregoing, Agent may, without notice, demand or legal process
of any kind, take possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be found, and may enter
onto any of Borrower’s premises where any of the Collateral may be, and search
for, take possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of, and Agent shall have the right to
store the same at any of Borrower’s premises without cost to Agent or Lenders.
At Agent’s request, Borrower shall, at Borrower’s expense, assemble the
Collateral and make it available to Agent at one or more places to be
designated by Agent and reasonably convenient to Agent and Borrower. Borrower
recognizes that if Borrower fails to perform, observe or discharge any of its
Liabilities under this Agreement or the Other Agreements, no remedy at law will
provide adequate relief to Agent and Lenders, and agrees that Agent and Lenders
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages. Any notification of intended
disposition of any of the Collateral required by law will be deemed to be a
reasonable authenticated notification of disposition if given at least ten (10)
days prior to such disposition and such notice shall (i) describe Agent and
Borrower, (ii) describe the Collateral that is the subject of the intended
disposition, (iii) state the method of the intended disposition, (iv) state
that Borrower is entitled to an accounting of the Liabilities and state the
charge, if any, for an accounting and (v) state the time and place of any
public disposition or the time after which any private sale is to be made.
Agent and Lenders may disclaim any warranties that might arise in connection
with the sale, lease or other disposition of the Collateral and has no
obligation to provide any warranties at such time. Any Proceeds of any
disposition by Agent of any of the Collateral may be applied by Agent to the
payment of expenses in connection with the Collateral, including, without
limitation, legal expenses and reasonable attorneys’ fees, and any balance of
such Proceeds may be applied by Agent toward the payment of such of the
Liabilities in accordance with Section 8(c) of this Agreement.


 


17.                                 CONDITIONS PRECEDENT.


 


The obligation of Agent and
Lenders to fund the Term Loan, to fund the initial Revolving Loan, and to issue
or cause to be issued the initial Letter of Credit, is subject to the
satisfaction or waiver on or before the date hereof of the following conditions
precedent:


 


(a)                                  Agent shall have received each of the
agreements, opinions, reports, approvals, consents, certificates and other
documents set forth on the closing document list attached hereto as Schedule 17(a)
(the “Closing Document List”) in
each case in form and substance reasonably satisfactory to Lender;


 


(b)                                 Since May 4, 2004, no event shall have
occurred which has had or could reasonably be expected to have a Material
Adverse Effect on any Obligor, as determined by Agent or Requisite Lenders in
their Permitted Discretion;


 


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(c)                                  Agent shall have received payment in full of
all fees and expenses payable to it by Borrower or any other Person in connection
herewith, on or before disbursement of the initial Loans hereunder;


 


(d)                                 Agent shall have determined that immediately
after giving effect to (A) the making of the initial Loans, including without
limitation the Term Loan and the Revolving Loans, if any, requested to be made
on the date hereof, (B) the issuance of the initial Letter of Credit, if any,
requested to be made on such date, (C) the payment of all fees due upon such
date and (D) the payment or reimbursement by Borrower of Agent for all closing
costs and expenses incurred in connection with the transactions contemplated
hereby, Borrower has Excess Availability of not less than Ten Million and
No/100 Dollars ($10,000,000.00); and


 


(e)                                  The Obligors shall have executed and
delivered to Agent all such other documents, instruments and agreements which
Agent determines are reasonably necessary to consummate the transactions
contemplated hereby, including, without limitation an Amended and Restated
Continuing Unconditional Guaranty from Holdings.


 


18.           SETTLEMENTS,
DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.


 


On a weekly basis (or more
frequently if requested by Agent (a “Settlement
Date”), Agent shall provide each Lender with a statement of the
outstanding balance of the Liabilities as of the end of the Business Day
immediately preceding the Settlement Date (the “Pre-Settlement Determination Date”) and the current balance
of the Loans funded by each Lender (whether made directly by such Lender to
Borrower or constituting a settlement by such Lender of a previous
Disproportionate Advance made by Agent on behalf of such Lender to Borrower).
If such statement discloses that such Lender’s current balance of the Loans as
of the Pre-Settlement Determination Date exceeds such Lender’s Pro Rata Share
of the Liabilities outstanding as of the Pre-Settlement Determination Date,
then Agent shall, on the Settlement Date, transfer, by wire transfer, the net
amount due to such Lender in accordance with such Lender’s instructions, and if
such statement discloses that such Lender’s current balance of the Loans as of
the Pre-Settlement Determination Date is less than such Lender’s Pro Rata Share
of the Liabilities outstanding as of the Pre-Settlement Determination Date,
then such Lender shall, on the Settlement Date, transfer, by wire transfer the
net amount due to Agent in accordance with Agent’s instructions. In addition,
payments actually received by Agent with respect to the following items shall
be distributed by Agent to Lenders as follows:


 


(a)                                  Within one (1) Business Day of receipt
thereof by Agent, payments to be applied to interest on the Loans shall be paid
to each Lender in proportion to its Pro Rata Share, subject to any adjustments
for any Disproportionate Advances as provided in subsection 2(a)(i),
so that Agent shall receive interest on the Disproportion Advances and each
Lender shall only receive interest on the amount of funds actually advanced by
such Lender;


 


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(b)                                 Within one (1) Business Day of receipt thereof
by Agent, payments to be applied to the Letter of Credit fee set as provided in
Section 3 (a) hereof shall be paid to each Lender in proportion to
its Pro Rata Share; and


 


(c)                                  Within one (1) Business Day of receipt
thereof by Agent, payments to be applied to the unused line fee set forth in subsection 4(c)(i)
hereof shall be paid to each Lender in proportion to its Pro Rata Share.


 


Notwithstanding the
foregoing, Agent shall not be obligated to transfer to any Defaulting Lender
any payment made by Borrower to Agent, nor shall such Defaulting Lender be
entitled to share any interest, fees or other payment hereunder, until payment
is made by such Defaulting Lender to Agent as required in this Agreement.


 


19.                                 AGENT.


 


(a)                                  Appointment of Agent.


 


(i)                                     Each Lender hereby designates LaSalle as
Agent to act as herein specified. Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the notes and any other instruments and agreements referred to herein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
Except as otherwise provided herein, Agent shall hold all Collateral and all
payments of principal, interest, fees, charges and expenses received pursuant
to this Agreement or any of the Other Agreements for the benefit of Lenders.
Agent may perform any of its duties hereunder by or through its agents or
employees.


 


(ii)                                  The provisions of this Section 19
are solely for the benefit of Agent and Lenders, and neither Borrower nor any
other Obligor shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Obligor.


 


(b)                                 Nature of Duties of Agent.


 


Agent shall not have duties,
obligations or responsibilities except those expressly set forth in this
Agreement and the Other Agreements. Neither Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or
their gross negligence or willful misconduct. The duties of Agent shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement or the Other Agreements a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or the Other Agreements, expressed or


 


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implied,
is intended to or shall be so construed as to impose upon Agent any obligations
in respect of this Agreement or the Other Agreements except as expressly set
forth herein.


 


(c)                                  Lack of Reliance on Agent.


 


(i)                                     Independently and without reliance upon
Agent, each Lender, to the extent it deems appropriate, has made and shall
continue to make (A) its own independent investigation of the financial or
other condition and affairs of Agent, each Obligor and any other Lender in connection with the taking or not taking of any action in connection
herewith and (B) its own appraisal of the creditworthiness of Agent, each
Obligor and any other Lender, and, except as expressly provided in this
Agreement, Agent shall not have any duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter.


 


(ii)                                  Agent shall not be responsible to any Lender
for any recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Agreement or the
Other Agreements or any notes or the financial or other condition of any
Obligor. Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or the Other Agreements, or the financial condition of any Obligor,
or the existence or possible existence of any Event of Default.


 


(d)                                 Certain Rights of Agent.


 


Agent shall have the right to request instructions
from Requisite Lenders or all Lenders, as applicable, pursuant to this
Agreement, by notice to each Lender. If Agent shall request instructions from
Requisite Lenders or all Lenders, as applicable, with respect to any act or
action (including the failure to act) in connection with this Agreement, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from Requisite Lenders or all
Lenders, as applicable, and Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder in accordance with the instructions of
Requisite Lenders or all Lenders, as applicable.


 


(e)                                  Reliance by Agent.


 


Agent shall be under no duty
to examine, inquire into, or pass upon the validity, effectiveness or
genuineness of this Agreement, any of the Other Agreements or
any instrument, document or communication furnished pursuant hereto or thereto
or in connection herewith or therewith. Agent shall be entitled to rely, and
shall be fully protected in relying,


 


55

















 


upon
any note, writing, resolution, notice, statement, certificate, telex, teletype
or telecopier message, cablegram, radiogram, order, electronic mail or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. Agent
may consult with legal counsel (including counsel for any Obligor with respect
to matters concerning any Obligor), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.


 


(f)                                    Indemnification of Agent.


 


To the extent Agent is not
promptly reimbursed and indemnified by Borrower, each Lender will reimburse and
indemnify Agent, in proportion to its Pro Rata Share, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder, in
any way relating to or arising out of this Agreement; provided, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s gross negligence or willful misconduct. If any indemnity
furnished to Agent for any purpose shall, in the opinion of Agent, be
insufficient or become impaired, Agent may call for additional indemnities and
cease to do, or not commence, the acts to be indemnified against, even if so
directed by Requisite Lenders or all Lenders, as applicable, until such
additional indemnification is provided. The obligations of Lenders under this subsection 19(f)
shall survive the payment in full of the Liabilities and the termination of
this Agreement.


 


(g)                                 Agent in its Individual Capacity.


 


With respect to the Loans
made by it pursuant hereto, Agent shall have the same rights and powers
hereunder as any other Lender or holder of a note or participation interest and
may exercise the same as though it was not performing the duties specified
herein; and the terms “Lenders,” “Requisite Lenders” or any similar terms
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity. Agent may accept deposits from, lend money to, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisor or other business with Borrower or any Affiliate of Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from Borrower for services in connection with this
Agreement and otherwise without having to account for the same to Lenders, to
the extent such activities are not in contravention of the terms of this
Agreement.


 


(h)                                 Holders of Notes.


 


Agent may deem and treat the
payee of any promissory note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with Agent. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is
the holder of any promissory


 


56

















 


note,
shall be conclusive and binding on any subsequent holder, transferee or
assignee of such promissory note or of any promissory note or notes issued in
exchange therefor.


 


(i)                                     Successor Agent.


 


(i)                                     Agent may, upon five (5) Business Days’
notice to Lenders and Borrower, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this subsection 19(i))
by giving written notice thereof to Lenders and Borrower. Upon any such
resignation, Requisite Lenders shall have the right, upon five (5) days’
notice, to appoint a successor Agent. If no successor Agent shall have been so
appointed by Requisite Lenders and accepted such appointment, within thirty
(30) days after the retiring Agent’s giving of notice of resignation, then,
upon five (5) days’ notice, the retiring Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a bank or a trust company or other
financial institution which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or of
any State thereof, or any affiliate of such bank or trust company or other
financial institution which is engaged in the banking business, having a
combined capital and surplus of at least Fifty Million and No/100 Dollars ($50,000,000.00).


 


(ii)                                  Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Section 19
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was an Agent under this Agreement.


 


(j)                                     Collateral Matters.


 


(i)                                     Each Lender authorizes and directs Agent to
enter into the Other Agreements for the benefit of Lenders. Each Lender hereby
agrees that, except as otherwise set forth herein, any action taken by
Requisite Lenders in accordance with the provisions of this Agreement or the
Other Agreements, and the exercise by the Requisite Lenders of the powers set
forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all Lenders. Agent is
hereby authorized on behalf of all Lenders, without the necessity of any notice
to or further consent from any Lender to take any action with respect to any
Collateral or Other Agreements which may be necessary to perfect and maintain
perfected the security interest in and liens upon the Collateral granted
pursuant to this Agreement and the Other Agreements.


 


(ii)                                  Agent will not, without the verbal consent of
all Lenders, which consent shall (a) be confirmed promptly thereafter in
writing and (b) not be unreasonably withheld or delayed, execute any release of
Agent’s security interest in any Collateral except for releases relating to
dispositions of Collateral (x) permitted by this


 


57

















 


Agreement and (y) in connection with the repayment in full of all of
the Liabilities by Borrower and the termination of all obligations of Agent and
Lenders under this Agreement and the Other Agreements; provided, that
with the consent of Requisite Lenders, Agent may release its liens on
Collateral having a book value not greater than ten percent (10%) of the total
book value of all Collateral, as determined by Agent, either in a single
transaction or series of related transactions, not to exceed twenty percent
(20%) of the book value of all Collateral during the Original Term or any
Renewal Term. Agent shall not be required to execute any such release on terms
which, in Agent’s opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such liens
without recourse or warranty. In the event of any sale or transfer of any of
the Collateral, Agent shall be authorized to deduct all of the expenses
reasonably incurred by Agent from the proceeds of any such sale or transfer.


 


(iii)                               Lenders hereby agree that the lien granted to
Agent in any property sold or disposed of in accordance with the provisions of
the Agreement shall be automatically released; provided, however
that Agent’s lien shall attach to and continue for the benefit of Agent and
Lenders in the proceeds and products of such property arising from any such
sale or disposition.


 


(iv)                              To the extent, pursuant to the provisions of
this subsection 19(j), Agent’s execution of a release is required
to release its lien upon any sale and transfer of Collateral which is consented
to in writing by Requisite Lenders or all Lenders, as applicable, and upon at
least five (5) business days’ prior written request by Borrower, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release of the liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon the Collateral that was sold or
transferred.


 


(v)                                 Agent shall not have any obligation
whatsoever to Lenders or to any other Person to assure that the Collateral
exists or is owned by Borrower or any other Obligor or is cared for, protected
or insured or that the liens granted to Agent herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care, disclosure
or fidelity any of the rights, authorities and powers granted or available to
Agent in this Section 19 or in any of the Other Agreements, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, given Agent’s own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its gross negligence or willful misconduct.


 


(vi)                              In the event that any Lender receives any
Proceeds of any Collateral by setoff, exercise of any banker’s lien or
otherwise, in an amount in excess of such Lender’s Pro Rata Share of such
Proceeds, such Lender shall purchase for cash (and other Lenders shall sell) interests in each of such other Lender’s Pro Rata Share of


 


58

















 


the Liabilities as would be necessary to cause all Lenders to share the
amount so set off or otherwise received with each other Lender in accordance
with their respective Pro Rata Shares. No Lender shall exercise any right of
set off or banker’s lien without the prior written consent of Agent.


 


(k)                                  Actions with Respect to Defaults.


 


In addition to Agent’s right
to take actions on its own accord as permitted under this Agreement, Agent
shall take such action with respect to an Event of Default as shall be directed
by Requisite Lenders or all Lenders, as applicable, under this Agreement;
provided, that until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable and in
the best interests of Lenders. No Lender shall have any right individually to
enforce or seek to enforce this Agreement or any Other Agreement or to realize
upon any Collateral, unless instructed to do so by Agent.


 


(l)                                     Delivery of Information.


 


Agent shall not be required
to deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by Agent from Borrower or
any other Obligor, Requisite Lenders, any Lender or any other Person under or
in connection with this Agreement or any Other Agreement except (i) as
specifically provided in this Agreement or any Other Agreement and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of Agent at the time of receipt of such
request and then only in accordance with such specific request.


 


(m)                               Demand.


 


Subject to the terms of this
Agreement, Agent shall make demand for repayment by Borrower of all Liabilities
owing by Borrower hereunder, after the occurrence of an Event of Default, upon
the written request of Requisite Lenders. Agent shall make such demand in such
manner as it deems appropriate, in its sole discretion, to effectuate the
request of the Requisite Lenders. Nothing contained herein shall limit the
discretion of Agent to take reserves, to deem certain Accounts and Inventory
ineligible, or to exercise any other discretion granted to Agent in this
Agreement.


 


(n)                                 Notice of Default.


 


Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of Default or any event
which, with passage of time or giving of notice, could become an Event of
Default, except with respect to Events of Default arising as a result of
Borrower’s failure to pay principal, interest or fees required to be paid to
Agent for the benefit of Lenders, unless Agent shall have received written
notice from a Lender or Borrower describing such Event of Default or event
which, with the passage of time or giving of notice, could become an Event of
Default, and which identifies such event as a “notice of default”. Upon receipt
of any


 


59

















 


such
notice or Agent becoming aware of Borrower’s failure to pay principal, interest
or fees required to be paid to Agent for the benefit of Lenders, Agent will
notify each Lender of such receipt or event.


 


(o)                                 Documentation and Syndication Agent.


 


Notwithstanding anything to the contrary contained elsewhere in this
Agreement or in any of the Other Agreements, neither the Documentation Agent
nor the Syndication Agent shall have any duties or responsibilities, nor shall
the Documentation Agent or Syndication Agent have or be deemed to have any
fiduciary relationship with any Lender or Obligor and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the Other Agreements or otherwise exist against the
Documentation Agent or Syndication Agent.


 


20.                                 ASSIGNABILITY.


 


(a)                                  Borrower shall not have the right to assign
this Agreement or any interest therein except with the prior written consent of
Agent and all Lenders.


 


(b)                                 Any Lender may make, carry or transfer Loans
at, to or for the account of, any of its branch offices or the office of an
Affiliate of such Lender except to the extent such
transfer would result in increased costs to Borrower.


 


(c)                                  Each Lender may, with the consent of Agent
and, so long as no Event of Default is then continuing, Borrower, which consent
shall not be unreasonably withheld, but without the consent of any other
Lender, assign to one or more banks or other financial institutions all or a
portion of its rights and obligations under this Agreement and the Other
Agreements; provided, that (i) for each such assignment, the parties
thereto shall execute and deliver to Agent, for its acceptance and recording in
the Register (as defined below), an Assignment and Acceptance Agreement in the
form attached hereto as Exhibit D (the “Assignment
and Acceptance”), and a processing and recordation fee of Three
Thousand Five Hundred and No/100 Dollars ($3,500.00) to be paid by the
assignee, and (ii) no such assignment shall be for less than Five Million and
No/100 Dollars ($5,000,000.00).  Upon
such execution and delivery of the Assignment and Acceptance to Agent, from and
after the date specified as the effective date in the Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto, and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, such assignee shall have the rights and
obligations of a Lender hereunder and (y) the assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (other than any rights
it may have pursuant to Section 23 of this Agreement which will
survive) and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).


 


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(d)                                 By executing and delivering an Assignment and
Acceptance, the assignee thereunder confirms and agrees as follows: (i) other than as provided in such Assignment and Acceptance, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement and the Other Agreements or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any of the Other Agreements, (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of Borrower or any other Obligor or the performance or observance by
Borrower or any other Obligor of its obligations under this Agreement and the
Other Agreements, (iii) such assignee confirms that it has received a copy of
this Agreement and the Other Agreements, together with copies of the financial
statements referred to in Section 9 of this Agreement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance, (iv)
such assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.


 


(e)                                  Agent shall maintain at its address referred
to in Section 24 of the Agreement a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of Lenders and the Revolving Loan Commitment and
Term Loan Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement.  The Register and copies of each Assignment
and Acceptance shall be available for inspection by Borrower, Agent or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.


 


(f)                                    Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit D
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to
Borrower. Within five (5) Business Days after its receipt of such notice,
Borrower shall execute and deliver to Agent in exchange for the surrendered
promissory note or notes, a new promissory note or notes to the order of the
assignee in amounts equal to such assignee’s commitments and outstanding Loans
hereunder and, if the assigning Lender has retained a portion of the Loans, a
new promissory note or notes to the order of the assigning Lender in an amount
equal to the remaining commitments and outstanding loans hereunder of such
assigning Lender under the terms of this Agreement. Such new promissory note or


 


61

















 


notes
shall re-evidence the indebtedness outstanding under the old promissory note or
notes and shall be in the aggregate principal amount of such surrendered
promissory note or notes, shall be dated of even date herewith and shall
otherwise be in substantially the form of the promissory note or notes subject
to such assignment.


 


(g)                                 Each Lender may sell participations (without
the consent of Agent, Borrower or any other Lender) to one or more parties, in
or to all (or a portion) of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Revolving Loan
Commitment, Term Loan Commitment or the Loans owing to it); provided, that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) Borrower, Agent, and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and (iv) such Lender
shall not transfer, grant, assign or sell any participation under which the
participant shall have rights to approve any amendment or waiver of this
Agreement.


 


(h)                                 Each Lender agrees that, without the prior
written consent of Borrower and Agent, it will not make any assignment
hereunder in any manner or under any circumstances that would require
registration or qualification of, or filings in respect of, any Loan or other
Liabilities under the securities laws of the United States of America or of any
jurisdiction.


 


(i)                                     In connection with the efforts of any Lender
to assign its rights or obligations or to participate interests, such Lender
may disclose any information in its possession regarding Borrower.


 


21.                                 AMENDMENTS,
ETC.


 


No amendment or waiver of any provision of this Agreement or any of the Other
Agreements, nor consent to any departure by any Obligor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Requisite
Lenders, or if Lenders shall not be parties thereto, by the parties thereto and
consented to by Requisite Lenders, and each such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, that no amendment, waiver or consent shall, unless
in writing and signed by all Lenders, do any of the following: (i) increase the
Revolving Loan Commitments, Term Loan Commitments of Lenders or subject Lenders
to any additional obligations to extend credit to Borrower, (ii) reduce the
principal of, or interest on, the Loans (other than as expressly permitted
herein) or any fees hereunder, (iii) postpone any date fixed for any payment in
respect of principal of, or interest on, the Loan or any fees hereunder, (iv)
change the Pro Rata Shares of Lenders, or any minimum requirement necessary for
Lenders or Requisite Lenders to take any action hereunder, (v) amend or waive
this Section 21, or change the definition of Requisite Lenders,
Revolving Loan Limit, Maximum Revolving Loan Limit or Applicable Margin, (vi)
reduce the Excess Availability requirement in subsection 12(k) or subsection 13(e)(z)
or (vii) except in connection with the financing, refinancing, sale or other
disposition of any


 


62

















 


asset
of Borrower permitted under this Agreement (or to the extent Requisite Lender
approval only is required with any such release pursuant to subsection 19(j)
hereof), release or subordinate any liens in favor of Agent, for the benefit of
Agent and Lenders, on any of the Collateral and provided further, that no
amendment, waiver or consent affecting the rights or duties of Agent under this
Agreement or any Other Agreement shall in any event be effective, unless in
writing and signed by Agent in addition to Lenders required hereinabove to take
such action. Notwithstanding any of the foregoing to the contrary, (a) for
purposes of voting or consenting to matters with respect to this Agreement and
the Other Agreements, a Defaulting Lender shall not be considered a Lender and
such Defaulting Lender’s Revolving Loan Commitment, Term Loan Commitment, shall
each be deemed to be $0 until such Defaulting Lender makes the payments
required in this Agreement and (b) the consent of Borrower shall not be
required for any amendment, modification or waiver of the provisions of this Section 21.


 


In the event that any
consent, waiver or amendment requiring the agreement of all Lenders as set
forth above is agreed to by the Requisite Lenders, but not all Lenders, Agent
may, in its sole discretion, cause any non-consenting Lender to assign its rights
and obligations under this Agreement and the Other Agreements to one or more
new Lenders or existing Lenders in the manner and according to the terms set
forth in Section 20 of this Agreement; provided, that (i) no Lender may be
required to assign its rights and obligations to a new Lender because such
lender is unwilling to increase its own loan commitments, (ii) such new Lender
must be willing to consent to the proposed amendment, waiver or consent and
(iii) in connection with such assignment the new Lender pays the assigning
Lender an amount equal to the Liabilities owing to such assigning Lender,
including all principal, accrued and unpaid interest and accrued and an unpaid
fees to the date of assignment. Such assignment shall occur within thirty (30)
days of notice by Agent to such non-consenting Lender of Agent’s intent to
cause such non-consenting Lender to assign its interests hereunder.


 


22.  NONLIABILITY OF AGENT AND LENDERS.


 


The relationship between
Borrower, Agent and Lenders shall be solely that of borrower and lender.
Neither Agent nor any Lender shall have any fiduciary responsibilities to
Borrower.  Neither Agent nor any Lender
undertakes any responsibility to Borrower to review or inform Borrower of any
matter in connection with any phase of Borrower’s business or operations.


 


23.  INDEMNIFICATION.


 


Borrower agrees to defend
(with counsel reasonably satisfactory to Agent), protect, indemnify and hold
harmless Agent and each Lender, each affiliate or subsidiary of Agent and each
Lender, and each of their respective shareholders, members, officers,
directors, managers, employees, attorneys and agents (each an “Indemnified Party”) from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party


 


63

















 


in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party thereto),
which may be imposed on, incurred by, or asserted against, any Indemnified
Party (whether direct, indirect or consequential and whether based on any
federal, state or local laws or regulations, including, without limitation,
securities laws and regulations, Environmental Laws and commercial laws and
regulations, under common law or in equity, or based on contract or otherwise)
in any manner relating to or arising out of this Agreement or any Other
Agreement, or any act, event or transaction related or attendant thereto, the
making or issuance and the management of the Loans or any Letters of Credit or
the use or intended use of the proceeds of the Loans or any Letters of Credit;
provided, however, that Borrower shall not have any obligation hereunder to any
Indemnified Party with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Indemnified Party. To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall satisfy such undertaking to the maximum extent permitted by applicable
law. Any liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand, and,
failing prompt payment, shall, together with interest thereon at the highest
rate then applicable to Loans hereunder from the date incurred by each
Indemnified Party until paid by Borrower, be added to the Liabilities of
Borrower and be secured by the Collateral. The provisions of this Section 23
shall survive the satisfaction and payment of the other Liabilities and the
termination of this Agreement.


 


24.  NOTICE.


 


All written notices and
other written communications with respect to this Agreement shall be sent by
ordinary, certified or overnight mail, by telecopy or delivered in person, and
in the case of Agent shall be sent to it at 135 South LaSalle Street, Chicago,
Illinois 60603-4105, attention: Mitchell Tarvid, facsimile number: (312)
904-6450, in the case of a Lender shall be sent to it at the address set forth
below its name on the signature page hereto or in the Assignment and Acceptance
Agreement and in the case of Borrower shall be sent to it at its principal
place of business set forth on Exhibit A hereto to the attention of the
Chief Financial Officer or as otherwise directed by Borrower in writing. All
notices shall be deemed received upon actual receipt thereof or refusal of
delivery.


 


25.  CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.


 


This Agreement and the Other
Agreements are submitted by Borrower to Agent and
Lenders for their acceptance or rejection at Agent’s principal place of
business as an offer by Borrower to borrow monies from Agent and Lenders now
and from time to time hereafter, and shall not be binding upon Agent or any
Lender or become effective until accepted by Agent and Lenders, in writing, at
said place of business. If so accepted by Agent and Lenders, this Agreement and
the Other Agreements shall be deemed to have been made at said place of
business. THIS AGREEMENT AND THE OTHER
AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE
OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,


 


64

















 


VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS,
INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN COLLATERAL
LOCATED OUTSIDE OF THE STATE OF ILLINOIS, WHICH SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION IN WHICH SUCH COLLATERAL IS
LOCATED. If any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or
remaining provisions of this Agreement.


 


BORROWER
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH FOR
NOTICE IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED. Agent shall provide a copy of such process to the law firm of Quarles
& Brady LLP, Attention: Andrew M. Barnes, Esq. by mail at the address of
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4497 or by facsimile
transmission at facsimile number (414) 978-8990. Notwithstanding anything to
the contrary contained herein, failure of Agent to provide a copy of such
process shall not impair Agent’s or any Lenders’ rights hereunder.


 


26.  HEADINGS OF
SUBDIVISIONS.


 


The headings of subdivisions
in this Agreement are for convenience of reference only, and shall not govern
the interpretation of any of the provisions of this Agreement.


 


27.  POWER OF ATTORNEY.


 


Borrower acknowledges and
agrees that its appointment of Agent as its attorney and agent-in-fact for the
purposes specified in this Agreement is an appointment coupled with an interest
and shall be irrevocable until all of the Liabilities are satisfied and paid in
full and this Agreement is terminated.


 


28.  CONFIDENTIALITY.


 


Borrower, Agent and each Lender hereby agrees to use
commercially reasonable efforts to assure that any and all information relating
to Borrower which is (i) furnished by Borrower to Agent or any Lender (or to
any affiliate of Agent or any Lender); and (ii) non-public, confidential or
proprietary in nature, shall be kept confidential by Agent and such Lender or
such affiliate in accordance with applicable law; provided, however, that such
information and other credit information relating to Borrower may be
distributed by such party to such party’s directors, officers, employees,
attorneys, affiliates,


 


65

















 


assignees,
participants, auditors, agents and regulators, to Agent and any other Lender
and upon the order of a court or other governmental agency having jurisdiction
over Agent or such Lender or such affiliate, to any other party. In addition
such information and other credit information may be distributed by Agent or
any Lender to potential participants or assignees of any portion of the
Liabilities, provided, that such potential participant or assignee agrees to
follow the confidentiality requirements set forth herein. Borrower, Agent and
each Lender further agree that this provision shall survive the termination of
this Agreement. Notwithstanding the foregoing, Borrower hereby consents to
Agent publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement.


 


29.  COUNTERPARTS.


 


This Agreement, any of the Other Agreements and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed an original, but all of
which counterparts together shall constitute but one agreement.


 


30.  ELECTRONIC SUBMISSIONS.


 


Upon not less than sixty (60) days’ prior written
notice (the “Approved Electronic Form Notice”),
Agent may permit or require that any of the documents, certificates, forms,
deliveries or other communications, authorized, required or contemplated by
this Agreement or the Other Agreements, be submitted to Agent in “Approved Electronic Form” (as hereafter
defined), subject to any reasonable terms, conditions and requirements in the
applicable Approved Electronic Forms Notice. For purposes hereof “Electronic Form” means e-mail, e-mail
attachments, data submitted on web-based forms or any other communication
method that delivers machine readable data or information to Agent, and “Approved Electronic Form” means an
Electronic Form that has been approved in writing by Agent (which approval has
not been revoked or modified by Agent) and sent to Borrower in an Approved
Electronic Form Notice. Except as otherwise specifically provided in the
applicable Approved Electronic Form Notice, any submissions made in an
applicable Approved Electronic Form shall have the same force and effect that
the same submissions would have had if they had been submitted in any other
applicable form authorized, required or contemplated by this Agreement or the
Other Agreements.


 


31.  EFFECT
OF AMENDMENT AND RESTATEMENT.


 


Upon the date of this Agreement, the Original
Agreement (and, except as otherwise set forth in the following proviso, all
obligations and rights of any party thereunder), shall be amended and restated
by this Agreement; provided, however, that the obligation to repay the loans
and advances arising under the Original Agreement shall continue in full force
and effect and the liens and security interests securing payment thereof shall
be continuing but shall now be governed by the terms of this Agreement and the
Other Agreements.  No action or inaction
by LaSalle prior to the date of this Agreement shall be


 


66

















 


deemed
to have established a course of conduct between the parties hereto. All rights
and obligations of Borrower, Agent and any Lender shall be solely as set forth
in this Agreement and the Other Agreements.


 


32.  OTHER WAIVERS.


 


i.                                          IN NO EVENT SHALL AGENT OR ANY LENDER BE
LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.


 


ii.                                       Borrower hereby waives demand, presentment,
protest and notice of nonpayment, and further waives the benefit of all
valuation, appraisal and exemption laws.


 


iii.                                    Borrower hereby waives the benefit of any law
that would otherwise restrict or limit Agent or any Lender or any affiliate of
Agent or any Lender in the exercise of its right, after the occurrence and
during the continuance of an Event of Default, which is hereby acknowledged and
agreed to, to set-off against the Liabilities, without notice at any time
hereafter, any indebtedness, matured or unmatured, owing by Agent or any Lender
or such affiliate of Agent or any Lender to Borrower, including, without
limitation any Deposit Account at Agent or any Lender or such affiliate.


 


iv.                                   EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL OF
BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL, PROVIDED THAT IN THE EVENT THAT AGENT SEEKS TO ENFORCE ITS RIGHTS
HEREUNDER BY JUDICIAL PROCESS OR SELF HELP, AGENT SHALL PROVIDE BORROWER WITH
SUCH NOTICES AS ARE REQUIRED BY LAW.


 


v.                                      Agent’s and/or Lenders’ failure, at any time
or times hereafter, to require strict performance by Borrower of any provision
of this Agreement or any of the Other Agreements shall not waive, affect or
diminish any right of Agent or any Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Agent or any
Lender of an Event of Default under this Agreement or any default under any of
the Other Agreements shall not suspend, waive or affect any other Event of
Default under this Agreement or any other default under any of the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. No delay on the part of Agent or any
Lender in the exercise of any right or remedy under this Agreement or any Other
Agreement shall preclude other or further exercise thereof or the exercise of
any right or remedy. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the Other Agreements and no Event of Default under this Agreement or default
under any of the Other Agreements shall be deemed to have been suspended or
waived by Agent and/or Lenders unless such suspension or waiver is in writing,
signed by a duly authorized officer of Agent, Requisite Lenders or all Lenders,
as required herein, and directed to Borrower specifying such suspension or
waiver.


 


67

















 


33.  DESIGNATED
SENIOR INDEBTEDNESS.


 


The Liabilities under this
Agreement and the Other Agreements constitutes “Designated
Senior Indebtedness” under and as defined in the Indenture.


 


 


[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]


 


68

















 


IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the date first written
above.


 


	
  PERRY
  JUDD’S INCORPORATED

  	
   

  	
  LASALLE
  BUSINESS CREDIT, LLC

  as Agent and a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
  and

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving
  Loan Commitment: $21,818,182.00

  Term Loan Commitment: $14,181,818.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION, as

  a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  One
  South Wacker

  Suite 2980

  Chicago, Illinois 60606

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving
  Loan Commitment: $9,090,909.00

  Term Loan Commitment: $5,909,091.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  CIT GROUP/BUSINESS CREDIT, INC.,

  as a Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ten
  South LaSalle Street

  Chicago, Illinois 60603

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving
  Loan Commitment: $9,090,909.00

  Term Loan Commitment: $5,909,091.00

  	
   

  
										



 


69

















 


EXHIBIT A —
BUSINESS AND COLLATERAL LOCATIONS


 


Attached to and made a part of that certain Loan and
Security Agreement of even date herewith among PERRY JUDD’S INCORPORATED (“Borrower”) and LASALLE BUSINESS CREDIT,
LLC, as Agent and all Lenders from time to time a party hereto.


 


A.                                   Borrower’s
business locations (please indicate which location is the principal place of
business and at which locations originals and all copies of Borrower’s books,
records and accounts are kept).


 


1.                                       575 West Madison Street
Waterloo, Wisconsin 53594-0097

[principal place of
business/leased location]


 


B.                                     Other locations of Collateral (including, without
limitation, warehouse locations, processing locations, consignment locations)
and all post office boxes of Borrower. Please indicate the relationship of such
location to Borrower (i.e. public warehouse, processor, etc.).


 


1.                                       1300
Sauk Avenue

Baraboo, Wisconsin

[leased location]


 


2.                                       161 North Jackson Street
Waterloo, Wisconsin

[leased location]


 


3.                                       275 South Jackson Street

Waterloo, Wisconsin

[leased location]


 


4.                                       200 South Jackson Street
Waterloo, Wisconsin

[leased location]


 


5.                                       207 South Jackson Street
Waterloo, Wisconsin

[leased location]


 


6.                                       One Shenandoah Valley Drive
Strasburg, Virginia 22657

[leased location]


 


70

















 


7.                                       377 Industrial Park
Mount Jackson, Virginia

[leased location]


 


8.                                       520 Second Avenue East

Spencer, Iowa 51301
[owned property – Agent will not have a mortgage]


 


9.                                       P.O. Box 97

Waterloo, Wisconsin 53594-0097


 


10.                                 P.O. Box 530

Spencer, Iowa 51301


 


C.                                     Bank Accounts of Borrower (other than those
at LaSalle Bank):


 


	
  Bank (with address)

  	
   

  	
  Account
  Number

  	
   

  	
  Type of
  Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Farmers & Merchants
  State Bank, Waterloo, Wisconsin

  	
   

  	
  114-155

  	
   

  	
  Checking Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Baraboo National Bank,
  Baraboo, Wisconsin

  	
   

  	
  101124358

  	
   

  	
  Checking Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Bank of America,
  Spencer, Iowa

  	
   

  	
  550158200133

  	
   

  	
  Checking Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  First Virginia Bank,
  Strasburg, Virginia

  	
   

  	
  22152288

  	
   

  	
  Checking Account

  



 


71

















 


EXHIBIT B – COMPLIANCE CERTIFICATE


 


Attached to and made a part of that certain Loan and Security
Agreement, as it may be amended in accordance with its terms from time to time,
including all exhibits attached thereto (the “Agreement”)
of even date herewith among PERRY JUDD’S INCORPORATED (“Borrower”), LASALLE BUSINESS CREDIT, LLC
as agent (“Agent”) and each lender
from time to time a party thereto (“Lenders”).


 


This Certificate is submitted pursuant to subsection 9(c) of the
Agreement.


 


The undersigned hereby certifies to Agent and Lenders that as of the
date of this Certificate:


 


1.                                       The undersigned is
the                                       of
Borrower.


 


2.                                       There exists no event or circumstance which
is or which with the passage of time, the giving of notice, or both would
constitute an Event of Default, as that term is defined in the Agreement, or,
if such an event or circumstance exists, a writing attached hereto specifies
the nature thereof, the period of existence thereof and the action that
Borrower has taken or proposes to take with respect thereto.


 


3.                                       No material adverse change in the condition,
financial or otherwise, business, property, or results of operations of
Borrower has occurred since [date of last
Compliance Certificate/last financial statements delivered prior to closing],
or, if such a change has occurred, a writing attached hereto specifies the
nature thereof and the action that Borrower has taken or proposes to take with
respect thereto.


 


4.                                       Borrower is in compliance with the
representations, warranties and covenants in the Agreement, or, if Borrower is
not in compliance with any representations, warranties or covenants in the
Agreement, a writing attached hereto specifies the nature thereof, the period
of existence thereof and the action that Borrower has taken or proposes to take
with respect thereto.


 


5.                                       The financial statements of Borrower being
concurrently delivered herewith have been prepared in accordance with generally
accepted accounting principles consistently applied and there have been no
material changes in accounting policies or financial reporting practices of
Borrower since [date of the last Compliance
Certificate/date of last financial statements delivered prior to closing]
or, if any such change has occurred, such changes are set forth in a writing
attached hereto.


 


72

















 


6.                                       Attached hereto is a true and correct
calculation of the financial covenants contained in the Agreement.


 


 


	
   

  	
  PERRY JUDD’S
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  



 


73

















 


EXHIBIT C – COMMERCIAL TORT CLAIMS


 


None


 


74

















 


EXHIBIT D –
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT


 


This Assignment and Acceptance (the “Assignment and Acceptance”) is
executed as of
               ,
       , between
                           
(“Assignee”) and
                                           (“Assignor”).


 


WITNESSETH:


 


WHEREAS, Assignor is party to an Amended and Restated Loan and Security
Agreement dated as of August 10,
2004 (as amended from time to time, the “Loan Agreement”) among LaSalle Business Credit, LLC, as agent and a lender,
all other lenders from time to time a party to the Loan Agreement, and Perry
Judd’s Incorporated (“Borrower”).


 


WHEREAS, Assignor has agreed to assign a portion of its loans and other
financial accommodations to Borrower pursuant to the Loan Agreement to Assignee
and Assignee has agreed to accept such assignment;


 


NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:


 


Defined Terms


 


Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.


 


Assignment and Assumption


 


Assignor hereby assigns to Assignee, without recourse, representation
or warranty (other than as expressly provided herein), and Assignee hereby
assumes, all of Assignor’s right, title and interest arising under the Loan
Agreement and the Other Agreements with respect to a portion of the outstanding
Loans to Borrower equal to Assignee’s Pro Rata Share (as set forth under
Assignee’s signature hereto) of the outstanding Loans to Borrower; provided,
that Assignee’s obligations to Assignor, Borrower or any Lender are strictly
limited to those obligations under the Loan Agreement unless otherwise
explicitly provided for herein. Upon the Assignment Effective Date (as defined
below), Assignee’s Revolving Loan Commitment, outstanding Term Loan balance and
Pro Rata Share shall be as set forth below Assignee’s signature hereto. After
giving effect to the assignment hereunder, Assignor’s remaining Revolving Loan
Commitment, outstanding Term Loan balance and Pro Rata Share shall be as set
forth below Assignor’s signature hereto.


 


75

















 


Payments on Assignment Effective Date


 


In consideration of the assignment by Assignor to Assignee pursuant to
this Assignment and Acceptance, Assignee agrees to pay to Assignor on or prior
to the Assignment Effective Date an amount specified by Assignor in writing on
or prior to the Assignment Effective Date which represents Assignee’s Pro Rata
Share of the Loans to Borrower and outstanding on the Assignment Effective
Date.


 


Effectiveness


 


This Assignment and Acceptance shall become effective upon the full
execution and delivery of this Assignment and Acceptance (the “Assignment
Effective Date”).


 


Representations and Warranties


 


a.               Each of Assignor and Assignee represents and
warrants to the other party as follows:


 


i.                                                                                          it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and
Acceptance and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Assignment and Acceptance;


 


ii.                                                                                       the making and performance by it of this
Assignment and Acceptance and all documents required to be executed and
delivered by it hereunder do not and will not violate any law or regulation of
the jurisdiction of its incorporation or any other law or regulation applicable
to it;


 


iii.                                                                                    this Assignment and Acceptance has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, reorganization, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and by general equity principles;
and


 


iv.                                                                                   all approvals, authorizations, or other
actions by, or filing with, any governmental authority necessary for the
validity or enforceability of its obligations under this Assignment and
Acceptance have been obtained.


 


v.                                                                                      Assignor represents and warrants to Assignee
that Assignee’s Pro Rata Share of the Maximum Loan Limit and the outstanding
Loans being assigned hereunder are not subject to any liens or security
interests created by or known to Assignor.


 


Miscellaneous


 


(a)                                  Assignor shall not be responsible to Assignee
for the execution (by any party other than Assignor), effectiveness,
genuineness, validity, enforceability, collectibility


 


76

















 


or
sufficiency of the Loan Agreement, the Other Agreements or any of the
agreements, documents or instruments executed and/or delivered in connection
therewith (collectively, the “Loan Documents”) or for any representations,
warranties, recitals or statements made therein or in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents made or furnished or made available by
Assignor to Assignee or by or on behalf of Borrower or any other person
obligated under the Loan Documents (collectively, the “Credit Parties”) to
Assignor or Assignee in connection with the Loan Documents and the transactions
contemplated thereby. Except as otherwise set forth in the Loan Agreement,
Assignor shall not be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the proceeds of the
Loans or as to the existence or possible existence of any default (matured or
unmatured) under the Loan Documents.


 


b.              Assignee represents and warrants that it has
made its own independent investigation of the financial condition and affairs
of the Credit Parties in connection with the making of the Loans and the
assignment by Assignor to Assignee hereunder and has made and shall continue to
make its own appraisal of the creditworthiness of the Credit Parties. Assignor
shall have no duty or responsibility (except as expressly provided in the Loan
Agreement) either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any credit or other information with respect thereto, whether coming into
its possession before the making of the Loans or at any time or times
thereafter and shall further have no responsibility with respect to the
accuracy of, or the completeness of, any information provided to Assignee,
whether by Assignor or by or on behalf of any Credit Party.


 


c.               Assignee (x) agrees that it will perform all
of the obligations which by the terms of the Loan Agreement are required to be
performed by it as a Lender and
(y) represents that it is either (i) a corporation organized under the laws of
the United States or a state thereof or (ii) entitled to complete exemption
from United States withholding tax imposed on or with respect to any payments
to be made to it pursuant to the Loan Agreement.


 


d.              ANY DISPUTE BETWEEN ASSIGNOR AND ASSIGNEE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE CONFLICTS OF LAW PROVISIONS OF
THE STATE OF ILLINOIS.


 


77

















 


e.               No term or provision of this Assignment and
Acceptance may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the parties to this Assignment and
Acceptance.


 


f.                 This Assignment and Acceptance may be
executed in one or more counterparts, each of which shall be an original but
all of which, taken together, shall constitute one and the same instrument.


 


g.              All payments hereunder or in connection
herewith shall be made in U.S. dollars and in immediately available funds,
payable to the account of Assignor at its office as designated in the Loan
Agreement.


 


h.              This Assignment and Acceptance shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Neither of the parties hereto may assign or
transfer any of its rights or obligations under this Assignment and Acceptance
without the prior consent of the other party. The preceding sentence shall not
limit the right of Assignee to assign all or part of its Pro Rata Share of the
Maximum Loan Limit and any outstanding Loans assigned under this Assignment and
Acceptance in the manner contemplated by the Loan Agreement.


 


i.                  All representations and warranties made
herein and indemnities provided for herein shall survive the consummation of
the transactions contemplated hereby.


 


78

















 


IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Acceptance as the date first above written.


 


 


	
   

  	
   

  	
  ,

  
	
   

  	
  as Assignor

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Pro Rata Share:

  	
   

  	
  %

  
	
   

  	
  Revolving Loan
  Commitment: $

  	
   

  	
   

  
	
   

  	
  Outstanding Term Loan
  balance $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  ,

  
	
   

  	
  as Assignee

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Pro Rata Share:

  	
   

  	
  %

  
	
   

  	
  Revolving Loan
  Commitment: $

  	
   

  	
   

  
	
   

  	
  Outstanding Term Loan
  balance $

  	
   

  	
   

  
											



 


79

















 


SCHEDULE 1
— PERMITTED LIENS


 


	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  22288748

  
	
  Filed:

  	
  09/11/2002

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  30190010

  
	
  Filed:

  	
  01/06/2003

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  TCF Leasing Inc dba TCF Express Leasing

  
	
  File Number:

  	
  30223183

  
	
  Filed:

  	
  01/08/2003

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment (leased)

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  Fleet Capital Corporation

  
	
  File Number:

  	
  31750101

  
	
  Filed:

  	
  06/02/2003

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  33124214

  
	
  Filed:

  	
  11/26/2003

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment (leased)

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  40227431

  
	
  Filed:

  	
  01/27/2004

  
	
  Jurisdiction:

  	
  S/S Delaware

  
	
  Collateral:

  	
  Specific Equipment

  



 


80

















 


	
  Debtor:

  	
  Perry Judd’s Inc.

  
	
  Secured Party:

  	
  NMHG Financial
  Services, Inc.

  
	
  File Number:

  	
  40267106

  
	
  Filed:

  	
  02/02/2004

  
	
  Jurisdiction:

  	
  S/S
  Delaware

  
	
  Collateral:

  	
  Specific Equipment
  (leased)

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  CIT Communications
  Finance Corporation

  
	
  File Number:

  	
  40624769

  
	
  Filed:

  	
  03/04/2004

  
	
  Jurisdiction:

  	
  S/S
  Delaware

  
	
  Collateral:

  	
  Specific Equipment
  (leased)

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  Siemens Financial
  Services, Inc.

  
	
  File Number:

  	
  40907354

  
	
  Filed:

  	
  03/31/2004

  
	
  Jurisdiction:

  	
  S/S
  Delaware

  
	
  Collateral:

  	
  In lieu filing – to
  include filing numbers:  018678
  (included in previous search 2002) and 0001127825

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  Transamerica Equipment
  Financial Services Corporation

  
	
  File Number:

  	
  02023656

  
	
  Filed:

  	
  01/05/2001

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  American Medical
  Association

  
	
  File Number:

  	
  02800189067

  
	
  Filed:

  	
  07/03/2000

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  [                       ]

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  Sun Chemical
  Corporation

  
	
  File Number:

  	
  030012385322

  
	
  Filed:

  	
  07/25/2003

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  



 


81

















 


	
  Debtor:

  	
  Perry Judds

  
	
  Secured Party:

  	
  Kodak Polychrome
  Graphics LLC

  
	
  File Number:

  	
  030007940121

  
	
  Filed:

  	
  05/12/2003

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judds Inc.

  
	
  Secured Party:

  	
  Kodak Polychrome
  Graphics LLC

  
	
  File Number:

  	
  030005668530

  
	
  Filed:

  	
  04/07/2003

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judds Inc.

  
	
  Secured Party:

  	
  Kodak Polychrome
  Graphics LLC

  
	
  File Number:

  	
  030003331616

  
	
  Filed:

  	
  02/27/2003

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judds Baraboo Div

  
	
  Secured Party:

  	
  Sun Chemical
  Corporation

  
	
  File Number:

  	
  020016693833

  
	
  Filed:

  	
  09/16/2002

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Consigned Inventory

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  Kodak Polychrome
  Graphics LLC

  
	
  File Number:

  	
  020014795228

  
	
  Filed:

  	
  08/09/2002

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s
  Incorporated

  
	
  Secured Party:

  	
  Kodak Polychrome
  Graphics LLC

  
	
  File Number:

  	
  020014259223

  
	
  Filed:

  	
  07/31/2002

  
	
  Jurisdiction:

  	
  S/S Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  



 


82

















 


	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  De Lage Financial Services, Inc.

  
	
  File Number:

  	
  030605
  7018

  
	
  Filed:

  	
  06/05/2003

  
	
  Jurisdiction:

  	
  S/S Virginia

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judds

  
	
  Secured Party:

  	
  Kodak Polychrome Graphics LLC

  
	
  File Number:

  	
  030625 7261

  
	
  Filed:

  	
  06/25/2003

  
	
  Jurisdiction:

  	
  S/S Virginia

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  Wisconsin Power and Light Company

  
	
  File Number:

  	
  839636

  
	
  Filed:

  	
  05/24/2004

  
	
  Jurisdiction:

  	
  Sauk County, Wisconsin

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  02000047

  
	
  Filed:

  	
  09/12/2002

  
	
  Jurisdiction:

  	
  Shenandoah County, Virginia

  
	
  Collateral:

  	
  Specific Equipment

  
	
   

  	
   

  
	
  Debtor:

  	
  Perry Judd’s Incorporated

  
	
  Secured Party:

  	
  General Electric Capital Corporation

  
	
  File Number:

  	
  04000002

  
	
  Filed:

  	
  1/28/2004

  
	
  Jurisdiction:

  	
  Shenandoah County, Virginia

  
	
  Collateral:

  	
  Specific Equipment

  



 


83

















 


SCHEDULE 5(a)
— EXCLUDED EQUIPMENT


 


1.                                       One
(1) new Heidelberg Web Systems model Pacesetter 1000 saddle binding system as
described on contract dated 01/13/99, CSO# S00899.


 


2.                                       One
(1) New Sheridan Systems Saddle Stitching System Serial Number: CS95159, Model
Number SP1000


 


3.                                       Heidelberg
Finishing Systems

SP 1000 Stitcher

Vin/Serial No.: BC2100


 


84

















 


SCHEDULE 11(g) – LITIGATION


 


None


 


85

















 


SCHEDULE 11(i)
– AFFILIATE TRANSACTIONS


 


None


 


86

















 


SCHEDULE 11(j) – NAMES & TRADE NAMES


 


Perry Judd’s
Incorporated (Borrower/Legal Name)


 


87

















 


SCHEDULE 11(n) – INDEBTEDNESS


 


(i)      
$50,221,000 under the Indenture


 


(ii)      Indebtedness to LaSalle National Leasing
Corporation


 


88

















 


SCHEDULE 11(p) – PARENT, SUBSIDIARIES AND AFFILIATES


 


Perry Judd’s Holdings, Inc. (Parent)


 


89

















 


SCHEDULE 12(j) – CHARGES REGARDING CHECKING ACCOUNTS


 


See Attached


 


90

















 


SCHEDULE 13(f) – LOANS BY BORROWER


 


None


 


91

















 


SCHEDULE 17(a)
– CLOSING DOCUMENT CHECKLIST


 


1.                                       Amended
and Restated Loan and Security Agreement (including Exhibits and Schedules)


 


2.                                       $21,818,182.00
Amended and Restated Revolving Note for Loans in favor of LaSalle


 


3.                                       $14,181,818.00
Term Note for Loans in favor of LaSalle


 


4.                                       $
9,090,909.00 Revolving Note for Loans in favor of PNC Bank


 


5.                                       $5,909,091.00
Term Note for Loans in favor of PNC Bank


 


6.                                       $
9,090,909.00 Revolving Note for Loans in favor of CIT


 


7.                                       $5,909,091.00
Term Note for Loans in favor of CIT


 


8.                                       UCC
financing statements showing Borrower as debtor filed with each of the
following offices:


 


	
  State

  	
   

  	
  Office

  	
   

  	
  Includes

  Fixtures

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delaware

  	
   

  	
  S/S Delaware

  	
   

  	
  N/A

  
	
  Delaware (Amendment)

  	
   

  	
  S/S Delaware

  	
   

  	
  N/A

  
	
  Wisconsin

  	
  (5)

  	
   

  	
  Jefferson Cty

  	
   

  	
  Yes

  
	
  Virginia

  	
  (2)

  	
   

  	
  Shenandoah Cty

  	
   

  	
  Yes

  
	
  Iowa

  	
   

  	
   

  	
  Clay Cty

  	
   

  	
  Yes

  



 


9.                                       Items
relating to insurance:


 


a.                                       Insurance
policy(ies)


 


b.                                      Lender
Insurance Letter to Agent


 


c.                                       Assignment
of Business Interruption Insurance Policy


 


d.                                      Certificate(s)
of Insurance with respect to property and liability insurance, showing Agent as
certificate holder, lenders loss payee and additional insured, as applicable,
and with lenders loss payable clause in favor of Agent


 


e.                                       Letter
from insurance agent indicating Agent’s status as sole loss payee with respect
to the property insurance policy, sole assignee


 


92

















 


with respect to the
business interruption insurance policy


 


10.                                 Secretary’s
Certificate as to Certificate of Incorporation and By-Laws as each may be
amended, Incumbency of Officers and Stockholders


 


11.                                 Corporate
Resolutions


 


12.                                 Controlled
Disbursement Services Agreement


 


13.                                 Collateral Report Authorization Letter


 


14.                                 Authorization
to Disburse Loan Proceeds


 


15.                                 Amended
and Restated Continuing Unconditional Guaranty(ies) with Rider A-Special
Provisions and Certificate of Secretary Relating to Minutes of a Special
Meeting of the Board of Directors and Shareholders Regarding Adoption of
Guaranty:


 


a.               Perry Judd’s Holdings, Inc.


 


16.                                 Landlord’s
Agreement/Notice from each of the following:


 


(a)          Print (WI) QRS 12-40,
Inc. with respect to the properties located at 575 West Madison Street,
Waterloo, Wisconsin 53594-0097, 1300 Sauk Avenue, Baraboo, Wisconsin, 275 South
Jackson Street, Waterloo, Wisconsin, 200 South Jackson Street, Waterloo,
Wisconsin and 207 South Jackson Street, Waterloo, Wisconsin


 


17.                                 Attorney’s
Opinion Letter


 


18.                                 Master
Letter of Credit Agreement


 


19.                                 Accountant’s
Reliance Letter from Accountant [best efforts
basis]


 


20.                                 Accountant’s
Reliance Letter from Agent


 


21.                                 Monthly
Loan Request Form


 


22.                                 Wire
Transfer Security Procedures Telephone


 


23.                                 Waiver
Agreement


 


24.                                 On-Site
Visit Worksheet


 


93